Full text of "2001 DC Code, Volume 13, 2012 Supplementary Pamphlet, 2001 Edition"

See other formats

District of Columbia

OFFICIAL CODE

2001 Edition

Volume 13
Title 25

Alcoholic Beverages Regulation
to

Title 28

Commercial Instruments and Transactions
(Subtitle I, Articles 1 to 3)

2012
Supplementary Pamphlet

Replacing 2011 supplementary pamphlet

WEST.

A Thomson Reuters business

Mat #41293880 13

The District of Columbia

Official Comments of the Uniform Commercial Code copyright © 2012 The American Law Institute and the National
Conference of Commissioners on Uniform State Laws. Reproduced with permission.

West's and Westlaw are registered in the U.S. Patent and Trademark Office.

PRINTED ON 10% POST CONSUMER RECYCLED PAPER

COUNCIL OF THE DISTRICT OF
COLUMBIA

Kwame R. Brown, Chairman

Yvette M. Alexander Jack Evans

Marion Barry Jim Graham

Muriel Bowser Kenyan R. McDuffie

Michael A. Brown Phil Mendelson

David Catania Vincent B. Orange, Sr.

Mary M. Cheh Tommy Wells

OFFICE OF THE GENERAL
COUNSEL

Under Whose Direction This
Volume Has Been Prepared

V- David Zvenyach, General Counsel

John Hoellen, Legislative Counsel

Benjamin F. Bryant, Jr., Codification Counsel

Karen R. Barbour, Legal Assistant

III

PREFACE

These annual cumulative pocket parts update the District of Columbia Official
Code, 2001 Edition, with permanent, temporary, and emergency legislation and
judicial constructions contained in annotations. These pocket parts contain the
Laws, general and permanent in their nature, relating to or in force in the
District of Columbia (except such laws as are of application in the General and
Permanent Laws of the United States) as of May 10, 2012.

Notes of decisions of District and Federal courts include cases published
through May 1, 2012.

Current legislation between pamphlets or pocket parts can be obtained on
WestlawNext or Westlaw DC-LEGIS Database.

The unannotated District of Columbia Official Code can be accessed on the
District of Columbia Council website at http://www.dccouncil.us.

Later laws and annotations will be cumulated in the subsequent pamphlets
and annual Pocket Parts.

ADDITIONAL INFORMATION OR RESEARCH ASSISTANCE

For additional information or research assistance call the West reference
attorneys at 1-800-REF-ATTY (1-800-733-2889). Contact West's Editorial
Department directly with your questions and suggestions by e-mail at
west.editor@thomson.com.

Visit West's home page at west.thomson.com.

The Publisher

June, 2012

Westlaw

THE NEXT GENERATION OF ONLINE RESEARCH

WestlawNext is the world's most advanced Legal research system. By leveraging
more than a century of information ar\6 Legal analysis from Westlaw, this
easy-to-use system not only helps you find the information you need quickly,
but offers time-saving tools to organize and annotate your research online. As
with Westlaw.com, WestlawNext includes the editorial enhancements (e,g„
case headnotes, topics, key numbers) that make ft a perfect complement to
West print resources.

• FIND ANYTHING by entering citations, descriptive terms, or Boolean
terms and connectors into the WestSearch™ box at the top of every page.

* USE KEYCITE® to determine whether a case, statute, regulation,
or administrative decision is good law.

* BROWSE DATABASES right from the home page.

• SAVE DOCUMENTS to folders and add notes and highlighting online.

SIGN ON: next.westlaw.com

LEARN MORE: WestThomson.com/WestlawNext

FOR HELP: 1-800-WESTLAW (1-800-937-8529)

VII

CITE THIS BOOK

Thus: D.C. Official Code, 200 1 Ed. §

DISTRICT OF COLUMBIA

OFFICIAL CODE

2001 Edition

DIVISION V
LOCAL BUSINESS AFFAIRS

TITLE 25

ALCOHOLIC BEVERAGE REGULATION

Chapter Section

1 . General Provisions and Classification of Licenses 25-101

2. Alcoholic Beverage Regulation Administration 25-201

3. Requirements to Qualify for License 25-301

4. Application and Review Processes 25-402

5. Annual Fees 25-502

6. Protests, Referendum, and Complaints 25-601

7. Standards of Operation 25-701

8. Enforcement, Infractions, and Penalties 25-801

9. Taxes 25-91 1

1 0. Limitations on Consumers 25-1 001

Chapter 1
General Provisions and Classification of Licenses

Subchapter I. General Provisions

Section

25-115.

Section

25-101. Definitions.

25-116.

25-102. Sale of alcoholic beverages without a

license prohibited.

25-118.

25-104. Board authority to grant licenses.

25-119.

Subchapter II. Classification of Licenses.

25-120.

25-112. Off-premises retailer's licenses.

25-113. On-premises retailer's licenses.

25-122.

25-1 13a. License endorsements.

25-123.

Temporary license requirements and
qualifications.

Solicitor's license requirements and
qualifications.

Tasting permit requirements and quali-
fications.

Importation permit requirements and
qualifications.

Manager's license requirements and
qualifications.

Pool buying groups.

Farm winery retail license.

Subchapter I. General Provisions

§ 25-101. Definitions.

For the purposes of this title, the term:

(1) "ABRA" means the Alcoholic Beverage Regulation Administration established by
§ 25-202.

(2) "ABRA Fund" means the Alcoholic Beverage Regulation Administration Fund estab-
lished by § 25-210.

(3) "Adult" means a person who is 21 years of age or older.

(4) "Alcohol" means ethyl alcohol, hydrated oxide of ethyl, or spirit of wine, from
whatever source or by whatever processes produced.

§ 25-101 ALCOHOLIC BEVERAGES REGULATION

(5) "Alcoholic beverage" means a liquid or solid, patented or not, containing alcohol
capable of being consumed by a human being. The term "alcoholic beverage" shall not
include a liquid or solid containing less than one-half of 1% of alcohol by volume.

(6) "Applicant" means, as the context requires, the individual applicant, each member of
an applicant partnership or limited liability company, or each of the principal officers,
directors, and shareholders of an applicant corporation, or, if other than an individual, the
applicant entity.

(7) "ANC" means an Advisory Neighborhood Commission as authorized under D.C.
Official Code § 1-207.38.

(8) "Back-up drink" means a drink, including a single drink consisting of more than one
alcoholic beverage, that is served to a customer before the customer has consumed a
previously served drink.

(9) "Bartender" means a person who fixes, mixes, makes, or concocts an alcoholic
beverage for consumption.

(10) "Beer" means a fermented beverage of any name or description manufactured from
malt, wholly or in part, or from any substitute for malt.

(11) "Board" means the Alcoholic Beverage Control Board established by § 25-201.

(12) "Brew pub" means an establishment for the manufacture of beer to be sold for
consumption only at the place of manufacture and for sale to licensed wholesalers for the
purpose of resale to other licensees.

(13) "Business days" means Monday, Tuesday, Wednesday, Thursday, and Friday,
excluding holidays.

(14) "Caterer" means a corporation, partnership, individual, or limited liability company
that prepares, sells, delivers, and serves food and beverages to its customers, under an
agreement in advance of delivery, for a catered event on the premises designated by the
customer for the duration of the catered event.

(15) "Club" means a corporation, duly organized and in good standing under Chapters 1
and 4 of Title 29, owning, leasing, or occupying a building, or a portion thereof, at which the
sale of alcoholic beverages is incidental to, and not the prime source of revenue from, the
operation of the building or the portion thereof. The term "club" shall not include a college
fraternity or sorority.

(15A) "Cooperative agreement" shall have the same meaning, and is synonymous with,
voluntary agreement, as defined in paragraph (54) of this section.

(16) "Credit card" means a consumer credit card extended on a nationally recognized
account pursuant to a plan under which:

(A) The creditor may permit the customer to make purchases or obtain loans by the
use of a credit card, check, or other device as the plan may provide;

(B) The customer has the privilege of paying the balance in full or in installments; and

(17) "CSA" means Chapter 9 of Title 48.

(18) "DC Arena" means the multi-purpose arena for the performance of sports and
entertainment events and related amenities described in recital "E" of the Land Disposition
Agreement-Ground Lease By and Among the District of Columbia Redevelopment Land
Agency, the District of Columbia, and DC Arena L.P., dated December 29, 1995.

(19) "Director" means the Director of the Alcoholic Beverage Regulation Administration
appointed under § 25-207.

(20) "District" means the District of Columbia.

(21) "Establishment" means a business entity operating at a specific location.

(21A) "Entertainment" means live music or any other live performance by an actual
person, including live bands, karaoke, comedy shows, poetry readings, and disc jockeys.
The term "entertainment" shall not include the operation of a jukebox, a television, a radio,
or other prerecorded music,

(21B) "Farm winery" means a winery where at least 51% of the fresh fruits or
agricultural products used by the owner or lessee to manufacture the wine shall be grown
or produced on such farm.

ALCOHOLIC BEVERAGES REGULATION § 25-101

(22) "Food" means any substance consumed by human beings except alcoholic beverages
and any nonalcoholic liquid or solid substance served as part of the contents of an alcoholic
beverage drink.

(23) "Go-cup" means a drinking utensil provided at no charge or a nominal charge to a
customer for the purpose of consuming alcoholic beverages off the premises of an
establishment.

(24) "Gross annual receipts" means the total amount of money received during the most
recent one-year accounting period for the sale of food and alcoholic beverages, not including
the amount received for taxes and gratuities in conjunction with sales or charges for
entertainment or other services. Gross annual receipts are subject to audit and examina-
tion under § 25-802.

(24 A) "Gross annual food sales" means the total amount of food sold during the most
recent one-year accounting period. Gross annual food sales are subject to audit and
examination under § 25-802.

(25) "Hotel" means an establishment where food and lodging are regularly furnished to
transients and which has at least 30 guest rooms and a dining room in the same or
connecting buildings.

(26) "Interest" includes the ownership or other share of the operation, management, or
profits of a licensed establishment. The term "interest" shall not include an agreement for
the lease of real property.

(27) "Keg" means a container which is capable of holding 4 gallons or more of beer, wine,
or spirits and which is designed to dispense beer, wine, or spirits directly from the
container.

(28) "Land Disposition Lease" means the Land Disposition Agreement-Ground Lease
By and Among the District of Columbia Redevelopment Land Agency, the District of
Columbia, and DC Arena L.P., dated December 29, 1995.

(29) "Legal drinking age" means 21 years of age.

(30) "Legitimate theater" means premises in which the principal business shall be the
operation of live theatrical, operatic, or dance performances, or such other lawful adult
entertainment or recreational facilities as the Board, giving clue regard to the convenience
of the public and the strict avoidance of sales prohibited by this title, shall, by regulation,
classify as legitimate theater. The term "legitimate theater" shall not mean a motion
picture theater.

(31) "Locality" means the neighborhood within 600 feet of an establishment.

(32) "Manufacture" includes any purification or repeat distillation processes or rectifica-
tion.

(33) "Nightclub" means a space in a building, and the adjoining space outside of the
building, regularly used and kept open as a place that serves food and alcoholic beverages
and provides music and facilities for dancing.

(34) "Nude performance" means dancing or other entertainment by a person whose
genitals, pubic region, or buttocks are less than completely and opaquely covered and, in
the case of a female, whose breasts are less than completely and opaquely covered below a
point immediately above the top of the areola.

(35) "Open container" means a bottle, can, or other container that is open or from which
the top, cap, cork, seal, or tab seal has at some time been removed.

(36) "Parking" means that area of public space which lies between the property line and
the edge of the actual or planned sidewalk which is nearer to such property line, as such
property line and sidewalk are shown on the records of the District.

(37) "Person" includes an individual, partnership, corporation, limited liability company,
and an unincorporated association.

(37A) "Pool buying agent" means the licensed vendor who is registered by the pool
buying group with the Alcoholic Beverage Regulation Administration.

(37B) "Pool buying group" means a group of 2 or more licensees under an on-premises
restaurant license (R), as defined in § 25-1 13(b), who have been approved by the Alcoholic
Beverage Regulation Administration to consolidate orders for alcoholic beverages ordered
through a licensed pool buying agent from any lawful source in a single order.

(38) "Portion" means the neighborhood within 1800 feet of an establishment.

§ 25-101 ALCOHOLIC BEVERAGES REGULATION

(39) "Protest" means a written statement in opposition to the issuance of a license.

(40) "Protest hearing" means the adjudicatory proceeding held by the Board, after
receipt of a protest, to hear persons objecting to, or in support of, the issuance of a license.

(41) "Protest period" means a 45-day period during which an objection to the issuance or
renewal, substantial change in operation under § 25^04, or transfer to new location, may
be filed.

(42) "Residential districts" means those districts identified as residential by the zoning-
regulations and the official atlases of the Zoning Commission for the District of Columbia.

(43) Restaurant means a space in a building which shall:

(A)(i) Be regularly ready, willing, and able to prepare and serve food, have a kitchen
which shall be regularly open, have a menu in use, have sufficient food on hand to serve
the patrons from the menu, and have proper staff present to prepare and serve the food;

(ii) Be held out to and known by the public as primarily a food-service establish-
ment;

(hi) Have all advertising and signs emphasize food rather than alcoholic beverages
or entertainment;

(iv) Be open regular hours that are clearly marked with no unusual barriers to entry
(such as cover charges or membership requirements);

(v) Have its kitchen facilities open until at least 2 hours before closing;

(vi) Obtain an entertainment endorsement prior to offering entertainment, charging
a cover, or offering facilities for dancing;

(vii) If possessing an entertainment endorsement, be permitted to charge a cover
and advertise entertainment, but shall not primarily advertise drink specials;

(viii) Be permitted to have recorded and background music without obtaining an
entertainment endorsement;

(ix) Not have nude performances; and

(x) Have annual gross food sales of $1500 or $2000 per occupant (as determined by
the establishment's Board-approved certificate of occupancy), depending on license
class; or
(B)(i) Have adequate kitchen and dining facilities;

(ii) Keep its kitchen facilities open until 2 hours before closing;

(iii) Obtain an entertainment endorsement prior to offering entertainment, charging
a cover, or having facilities for dancing;

(iv) Be permitted to have recorded and background music without obtaining an
entertainment endorsement;

(v) Not have nude performances; and

(vi) Have the sale of food account for at least 45% of the establishment's gross
annual receipts.

(C) Any licensee operating under a C/R, D/R, C/H, or D/H license who is not in
compliance with the food sales requirements of this paragraph as of [September 30,
2004], shall be permitted to maintain its current license and operations for a period of 2
years from [September 30, 2004]; provided, that there is no substantial change in
operations during that period without a substantial change application.

(44) "RLA" means the District of Columbia Redevelopment Land Agency.

(45) "Sale" or "sell" includes offering for sale, keeping for sale, manufacturing for sale,
soliciting orders for sale, trafficking in, importing, exporting, bartering, delivering for value
or in any way other than by purely gratuitously transferring. Every delivery of any
alcoholic beverage made otherwise than purely gratuitously shall constitute a sale.

(46) "Section" means the neighborhood within 1,200 feet of an establishment.

(47) "Settlement conference" means a meeting between the applicant and the protestants
held for the purpose of discussing and resolving, where possible, the objections raised by
the protestants.

(48) "Sign" shall have the same meaning as defined in Chapter 31 of Title 12 of the
District of Columbia Municipal Regulations.

ALCOHOLIC BEVERAGES REGULATION § 25-101

(48A) "Southeast Federal Center" means the area as defined in section 2 of the
Southeast Federal Center Public-Private Development Act of 2000, approved November 1,
2000 (Pub. L. No. 106-407; 114 Stat. 1758), and Chapter 18 of Title 11 of the District of
Columbia Municipal Regulations.

(49) "Spirits" means:

(A) A beverage which contains alcohol mixed with water and other substances in
solution, including brandy, rum, whisky, cordials, and gin; and

(B) An alcoholic beverage containing more than 14% alcohol.

(50) "Statement" means a representation by words, design, picture, device, illustration,
or other means.

(51) "Table" shall not include a counter, bar, or similar contrivance.

(52) "Tavern" means a space in a building which:

(A) Is regularly used and kept open as a place where food and alcoholic beverages are
served;

(B) May offer entertainment, except nude performances, and offer facilities for danc-
ing for patrons only with an entertainment endorsement and may have recorded and
background music without an entertainment endorsement; and

(53) "Valid identification document" means an official identification issued by an agency
of government (local, state, federal, or foreign) containing, at a minimum, the name, date of
birth, signature, and photograph of the bearer.

(54) "Voluntary agreement" means a settlement agreement which becomes part of a
license.

(55) Repealed.

(56) "Wine" means an alcoholic beverage containing not more than 14% alcohol by
volume obtained by the fermentation of the natural sugar content of fruits or other
agricultural products containing sugar whether or not other ingredients are added.

(Jan. 24, 1934, 48 Stat. 319, ch. 4, § 3; Aug. 27, 1935, 49 Stat. 897, ch. 756, § 1; Dec. 8, 1970, 84 Stat.
1393, Pub. L. 91-535, § ■ 1; Apr. 18, 1978, D.C. Law 2-73, § 3, 24 DCR 7066; Sept. 29, 1982, D.C. Law
4-157, §§ 2, 15, 29 DCR 3617; Mar. 10, 1983, D.C. Law 4-204, § 2, 30 DCR 185; Aug. 2, 1983, D.C. Law
5-16, § 2, 30 DCR 3193; May 23, 1986, D.C. Law 6-119, § 2, 33 DCR 2447; Mar. 7, 1987, D.C. Law
6-217, § 2, 34 DCR 907; Aug. 17, 1991, D.C. Law 9-40, § 2(a), 38 DCR 4974; Oct. 3, 1992, D.C. Law
9-174, § 2(a), 39 DCR 5859; Sept. 11, 1993, D.C. Law 10-12, § 2(a), 40 DCR 4020; May 24, 1994, D.C.
Law 10-122, § 2(a), 41 DCR 1658; Apr. 12, 1997, D.C. Law 11-258, § 2(a), 44 DCR 1421; Mar. 26, 1999,
D.C. Law 12-202, § 2(a), 45 DCR 8412; Mar. 26. 1999, D.C. Law 12-206, § 2(a), 45 DCR 8430; May 3,
2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 3, 2001, D.C. Law 14-28, § 3002(a), 48 DCR 6981; Oct.
1, 2002, D.C. Law 14-190, § 1702(a), 49 DCR 6968; Sept. 30, 2004, D.C. Law 15-187, §§ 301(b), 401(b), 51
DCR 6525; Mar. 2, 2007, D.C. Law 16-191, § 47(b), 53 DCR 6794; July 18, 2008, D.C. Law 17-201,
§ 2(b), 55 DCR 6289; Mar. 3, 2010, D.C. Law 18-111, § 2082(n)(l), 57 DCR 181; July 2, 2011, D.C. Law
18-378, § 3(f), 58 DCR 1720; Oct. 20, 2011, D.C. Law 19-23, § 2(a), 58 DCR 6509.)

Historical and Statutory Notes

Effect of Amendments "(43) "Restaurant" means a space in a building

D.C. Law 14-28 rewrote par. (2) which had read which:

as follows: "(A) Is regularly used and kept open as a place

"(2) ABRA Account' means the Alcoholic Bever- where food is served;

age Regulation Administration Account established "(B) Keeps its kitchen facilities open until 2

by § 25-210' . hours before closing and for which sales of food

D.C. Law 14-190 added par. (15A). accounts for at least 45% of the establishment's

D.C. Law 15-187 added par. (21A); in par. (24), £ T0SS annual receipts; and

added "Gross annual receipts are subject to audit "(C) May offer entertainment, except nude per-

and examination under § 25-802." at the end of formances, and facilities for dancing."

the paragraph'; added pars. (24A), (37A) and D .c. Law 16-191, in par. (43)(C), substituted

(37B); rewrote par. (43); and in subpar. (52)(B), « this paragraph" for "§ 25-101(43)".

substituted "offer facilities for dancing for patrons ^ r , T .„ OA1 -, , -, /01 r,x

only with an entertainment endorsement and may D ' C " Law 17 - 201 added ^ ar ' (21B) "

have recorded and background music without an D - c - Law 18 " ln repealed par. (55), which had

entertainment endorsement" for "may allow danc- rea ^ as follows:

ing for its patrons only". Prior to amendment, "(55) 'Washington Convention Center' means

par. (43) had read as follows: the Washington Convention Center and the Con-

§ 25-101

ALCOHOLIC BEVERAGES REGULATION

vention Center Board of Directors, as established
by § 9-602, and the Washington Convention Cen-
ter Authority and the Washington Convention
Center Authority Board of Directors, as estab-
lished by §§ 9-803 and 9-806."

D.C. Law 18-378, in par. (15), substituted
"Chapters 1 and 4 of Title 29" for "Chapter 3 of
Title 29" .

DC. Law 19-23 added par. (48A).
Temporary Amendments of Section

Section 2 of D.C. Law 17-46, in par. (43)(C),
substituted "2 years and 6 months" for "2 years".

Section 4(b) of D.C. Law 17-46 provides that the
act shall expire after 225 days of its having taken
effect.

Section 2(a) of D.C. Law 18-346 added par.
(48A) to read as follows:

a (48A) 'Southeast Federal Center' means the
area as defined in section 2 of the Southeast
Federal Center Public-Private Development Act of
2000, approved November 1, 2000 (Pub. L. No.
106-407; 114 Stat, 1758), and Chapter 18 of Title
11 of the District of Columbia Municipal Regula-
tions.".

Section 4(b) of D.C. Law 18-346 provides that
the act shall expire after 225 days of its having
taken effect.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see §§ 2702(a) and 2703 of Fiscal Year 2002 Bud-
get Support Emergency Act of 2001 (DC. Act
14-124, August 3, 2001, 48 DCR 7861).

For temporary (90 day) amendment of section,
see § 1702(a) of Fiscal Year 2003 Budget Support
Emergency Act of 2002 (D.C. Act 14-453, July 23,
2002, 49 DCR 8026).

For temporary (90 day) amendment of section,
see § 2 of Restaurant and Hotel Audit Sufficiency
Emergency Act Of 2007 (DC. Act 17-77, July 26,
2007, 54 DCR 7630).

For temporary (90 day) amendment of section,
see § 2 of Restaurant and Hotel Audit Sufficiency
Congressional Review Emergency Act of 2007
(DC. Act 17-202, November 26, 2007, 54 DCR ).

For temporary (90 day) amendment of section,
see § 2082(n)(l) of Fiscal Year 2010 Budget Sup-
port Second Emergency Act of 2009 (D.C. Act
18-207, October 15, 2009, 56 DCR 8234).

For temporary (90 day) amendment of section,
see § 2082(n)(l) of Fiscal Year Budget Support
Congressional Review Emergency Amendment Act
of 2009 (DC. Act 18-260, January 4, 2010, 57 DCR
345).

For temporary (90 day) amendment of section,
see § 2(a) of Southeast Federal Center/Yards
Non-Discriminatory Grocery Store Emergency Act
of 2010 (DC. Act 18-674, December 28, 2010, 58
DCR 130).
Legislative Histoiy of Laws

Law 14-28, the "Fiscal Year 2002 Budget Sup-
port Act of 2001", was introduced in Council and
assigned Bill No. 14-144, which was referred to the

Committee Of the Whole. The Bill was adopted
on first and second readings on May 1, 2001, and
June 5, 2001, respectively. Signed by the Mayor
on June 29, 2001, it was assigned Act No. 14-85
and transmitted to both Houses of Congress for its
review. D.C. Law 14-28 became effective on Octo-
ber 3, 2001.

Law 14-190, the "Fiscal Year 2003 Budget Sup-
port Act of 2002", was introduced in Council and
assigned Bill No. 14-609, which was referred to the
Committee of the Whole. The Bill was adopted on
first and second readings on May 7, 2002, and June
4, 2002, respectively. Signed by the Mayor on
July 3, 2002, it was assigned Act No. 14-403 and
transmitted to both Houses of Congress for its
review. D.C. Law 14-190 became effective on
October 1, 2002.

Law 15-187, the "Omnibus Alcoholic Beverage
Amendment Act 2004", was introduced in Council
and assigned Bill No. 15-516, which was referred
to the Committee on Consumer and Regulatory
Affairs. The Bill was adopted on first and second
readings on April 20, 2004, and May 18, 2004,
respectively. Signed by the Mayor on June 23,
2004, it was assigned Act No. 15-442 and transmit-
ted to both Houses of Congress for its review.
D.C. Law 15-187 became effective on September

30, 2004.

Law 16-191, the "Technical Amendments Act of
2006", was introduced in Council and assigned Bill
No. 16-760, which was referred to the Committee
of the whole. The Bill was adopted on first and
second readings on June 20, 2006, and July 11,
2006, respectively. Signed by the Mayor on July

31, 2006, it was assigned Act No. 16-475 and
transmitted to both Houses of Congress for its
review. D.C. Law 16-191 became effective on
March 2, 2007.

Law 17-201, the "Omnibus Alcoholic Beverage
Amendment Act of 2008", was introduced in Coun-
cil and assigned Bill No.17-528 which was referred
to the Committee on Public Works and Environ-
ment. The Bill was adopted on first and second
readings on April 1, 2008, and May 6, 2008, respec-
tively. Signed by the Mayor on May 23, 2008, it
was assigned Act No. 17-398 and transmitted to
both Houses of Congress for its review. D.C. Law
17-201 became effective on July 18, 2008.

Law 18-111, the "Fiscal Year 2010 Budget Sup-
port Act of 2009", was introduced in Council and
assigned Bill No. 18-203, which was referred to the
Committee on the Whole. The bill was adopted on
first and second readings on May 12, 2009, and
September 22, 2009, respectively. Signed by the
Mayor on December 18, 2009, it was assigned Act
No. 18-255 and transmitted to both Houses of
Congress for its review. D.C. Law 18-111 became
effective on March 3, 2010.

Law 18-378, the "District of Columbia Official
Code Title 29 (Business Organizations) Enactment
Act of 2009", was introduced in Council and as-
signed Bill No. 18-500, which was referred to the
Committee on Public Services and Consumer Af-
fairs. The Bill was adopted on first and second

ALCOHOLIC BEVERAGES REGULATION § 25-102

readings on December 7, 2010, and December 21, Miscellaneous Notes

2010, respectively. Signed by the Mayor on Feb- D.C. Law 14-28, § 3003 provides that: "This
ruary 27, 2011, it was assigned Act No. 18-724 and title [Title XXX of Law 14-28] shall apply as of
transmitted to both Houses of Congress for its May 3, 2001."

review. D.C. Law 18-378 became effective on July Short title of title XVII of Law 14-190: Section

2j 2011. 1701 of D - C - Law 14-190 provided that title XVII

of the act may be cited as the Alcoholic Beverage
Law 19-23, the "Southeast Federal Cen- Regulation Act of 2002.
ter/Yards Non-Discriminatory Grocery Store Act Sections 402 and 403 of D.C. Law 15-187 pro-
of 2011", was introduced in Council and assigned v ^ e:

Bill No. 19-22, which was referred to the Commit- ,g ec m Rules and regulations>

tee of the Whole and the Committee on Health ^ r ^ } ^

Services. The Bill was adopted on first and sec- and regulat i ns to administer this title within 180

ond readings on June 21, 2011, and July 12, 2011, days f its effective date. The proposed rules and

respectively. Signed by the Mayor on July 28, regulations, as well as any subsequent rules and

2011, it was assigned Act No. 19-100 and transmit- regulations amending this title, shall be submitted
ted to both Houses of Congress for its review. to the Council for a 45-day period of review,
D.C. Law 19-23 became effective on October 20, excluding Saturdays, Sundays, legal holidays, and
9Q21 days of Council recess, If the Council does not

approve or disapprove the rules and regulations, in

References in Text whole or in part, by resolution with the 45-day

The effective date of the Omnibus Alcoholic Bev- review period, the proposed rules and regulations

erage Amendment Act of 2004, passed on 2nd shall be deemed approved,

reading on May 18, 2004 (Enrolled version of Bill "Sec. 403. Applicability.

15-516), referred to in subpar. (C) of par. (43), is "Section 401 shall apply upon the effective date

September 30, 2004. of the regulations promulgated under section 402."

§ 25-102. Sale of alcoholic beverages without a license prohibited.

(a) No person shall sell any alcoholic beverage in the District without having first obtained
an appropriate license as required by this title.

(b) No wholesaler or manufacturer located within the District shall offer any alcoholic
beverage for sale to, or solicit orders for the sale of any alcoholic beverage from, any person
not licensed under this title, irrespective of whether the sale is to be made inside or outside
the District.

(c) No person located outside the District shall ship, import, or cause to be shipped or
imported into the District, any alcoholic beverage without having first obtained an importation
permit under this title for such shipment or importation.

(d) No person operating any premises where food, nonalcoholic beverages, or entertain-
ment are sold or provided for compensation or where facilities are especially provided and
service is rendered for the consumption of alcoholic beverages who does not possess a license
under this title shall permit the consumption of alcoholic beverages on the premises.

(e)(1) No person shall sell or transfer alcoholic beverages between members of a pool
buying group, except for the combination of individual orders and the placement of a pool
order with a distributor.

(2) To effectuate convenience or economies of delivery of pool orders, a pool member
other than the buying agent may transfer to another pool member any portion of the
alcoholic beverages ordered by the transferee retailer as part of the single transaction pool
purchase; provided, that:

(A) The acquisition of alcoholic beverage product is recorded on an invoice maintained
by both participating retailers for 3 years and the invoice includes:

(i) That the transferee retailer has properly ordered the alcoholic beverages as part
of the pool order;

(ii) The date of acquisition;

(iii) The business names and addresses, the license names, and numbers of both
licenses involved; and

(iv) The resale certificate number of the licensee acquiring the products for resale;
and

§ 25-102 ALCOHOLIC BEVERAGES REGULATION

(B) The transfer is being made without cost or charge by the transferor retailer of any
nature whatsoever.

(3) A transfer pursuant to this subsection shall be made within 7 days of the pool
delivery without any cost or charge whatsoever to the transferee retailer.

(Jan. 24, 1934, 48 Stat. 323, ch. 4, § 9; June 29, 1953, 67 Stat. 102, ch. 159, § 404(b); Sept. 29, 1982, D.C.
Law 4-157, § 5, 29 DCR 3617; Feb. 24, 1987, D.C. Law 6-192. § 26(b), 33 DCR 7836; May 3, 2001, D.C.
Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 401(c), 51 DCR 6525.)

Historical and Statutory Notes

Effect of Amendments regulations, as well as any subsequent rules and

D.C. Law 15-187 added subsec. (e). regulations amending this title, shall be submitted

TpiHsWtiveHistorvoflws t0 the Council for a 45 ~ da y P eriod of review,

* x ^ „„„ „ nn . C1 ^ ^^ excluding Saturdays, Sundays, legal holidays, and

For Law 15-187, see notes following § 25-101. dayg of Council recess? If ' the Council does not

Miscellaneous Notes approve or disapprove the rules and regulations, in

Sections 402 and 403 of D.C. Law 15-187 pro- whole or in part, by resolution with the 45-day

vide: review period, the proposed rules and regulations

"Sec. 402. Rules and regulations. sha11 be deemed approved.

"The Mayor shall promulgate proposed rules " Sec - 4( ^- Applicability.

and regulations to administer this title within 180 "Section 401 shall apply upon the effective date

days of its effective date. The proposed rules and of the regulations promulgated under section 402."

§ 25-104. Board authority to grant licenses.

(a) The Board may issue licenses to persons who meet the requirements set forth in this
title.

(b) All licenses issued under this title, except for a temporary license issued under
§ 25-115, shall be valid for a term of 3 years and may be renewed upon completion of the
procedures set forth in this title and payment of the required fees.

(c) A license to sell alcoholic beverages in the District can be granted only by the Board
upon completion of the application and review process as contained in this title.

(d) Except as set forth in subchapter II of this chapter, each license or permit shall
particularly describe the place where the rights of the license are to be exercised.

(e) The Board, in issuing licenses, may require that certain conditions be met if it
determines that the inclusion of the conditions will be in the best interest of the locality,
section, or portion of the District where the licensed establishment is to be located. The
Board, in setting the conditions, shall state, in writing, the rationale for the determination.

(f) Unincorporated associations, other than limited liability companies, shall not be issued a
license other than a temporary license.

(Jan. 24, 1934, 48 Stat. 324, ch. 4, §§ 10, 13; Aug. 24, 1935, 49 Stat, 900, ch. 756, § 8; June 29, 1953, 67
Stat, 103, ch. 159, § 404(c); Dec. 8, 1970, 84 Stat. 1394, Pub. L. 91-535, § 5; Oct. 26, 1977, D.C. Law 2-27,
§ 2, 24 DCR 3720; Mar. 5, 1981, D.C. Law 3-157, § 2(c), 27 DCR 5117; July 26, 1986, D.C. Law 6-130,
§ 2, 33 DCR 3405; Mar. 7, 1987, D.C. Law 6-217, § 8, 34 DCR 907; May 24, 1994, D.C. Law 10-122,
§ 2(d), 41 DCR 1658; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law
14-190, § 1702(b), 49 DCR 6968; Sept. 30, 2004, D.C. Law 15-187, § 101(a), 51 DCR 6525.)

Historical and Statutory Notes

Effect of Amendments Emergency Act Amendments

D.C. Law 14-190 rewrote subsec. (f) which had For temporary (90 day) amendment of section,

™H a* foil™™- see § 1702(b) of Fiscal Year 2003 Budget Support

Emergency Act of 2002 (D.C. Act 14-453, July 23,

"(f) Unincorporated associations shall be not be 2002, 49 DCR 8026).

issued a license. Legislative History of Laws

D.C. Law 15-187, in subsec. (b), substituted "a For Law 14-190, see notes following § 25-101.

term of 3 years" for "a term of 2 years". For Law 15-187, see notes following § 25-101.

ALCOHOLIC BEVERAGES REGULATION § 25-112

Subchapter II. Classification of Licenses.

§ 25-112. Off -premises retailer's licenses.

(a) An off-premises retailer's license shall authorize the licensee to sell alcoholic beverages
from the place described and to deliver the same in the barrel, keg, sealed bottle, or other
closed container in which the same was received by the licensee.

(b) The barrel, keg, sealed bottle, or other closed container shall not be opened, or the
contents consumed, at the licensed establishment.

(c) The license shall not authorize the licensee to sell to other licensees for resale; provided,
that the licensee under an off -premises retailer's license, class A, may sell to:

(1) Caterers licensed under § 25-1 13(i); and

(2) [Expired]

(3) If the licensee that is a member of a pool buying group, to other members of the
same pool buying group any alcoholic beverages if:

(A) A pool member other than the buying agent transfers to another pool member any
portion of the alcoholic beverages ordered by the transferee retailer as part of the single
transaction pool purchase;

(B) A transfer pursuant to this section is made within 7 days of the pool delivery
without any cost or charge whatsoever being made against the transferee retailer;

(C) The acquisition of alcoholic beverage products is recorded in an invoice maintained
by both participating retailers for 3 years and includes:

(i) Business name, address, and license number of each licensee;

(ii) Names, sizes, and quantities of the products transferred;

(iii) Date that the delivery of products was received;

(iv) Date that the physical transfer of products was made;

(v) Unique identifier that links the record with a specific pool order; and

(vi) The resale certificate number of the licensee acquiring the products for resale.

(d) There shall be 2 classes of off-premises retailer's licenses:

(1) A retailer's license, class A, shall authorize the licensee to sell spirits, beer, and wine.

(2) A retailer's license, class B, shall authorize the licensee to sell beer and wine.

(e) The licensee under an off-premises retailer's license, class B, who qualifies for the
license as a result of the application of § 25-303(c), § 25-331 (d), § 25-332(c), or § 25-333(c),

shall:

(1) File with the Board, within 60 days after the end of each year, a statement of
expenditures and receipts by the licensed establishment containing the following:

(A) The total amount of receipts for the sale of alcoholic beverages, indicating the
amount received for the sale of alcoholic beverages, the amount received for the sale of
food, and the percentage of the total amount of receipts represented by each amount;

(B) A statement indicating the method used to compute the amounts and percentages;
and

(C) An affidavit, executed by the individual licensee, partner of an applicant partner-
ship, or the appropriate officer of an applicant corporation or limited liability company,
attesting to the truth of the annual statement.

(2) The annual accounting period, for the purposes of the annual report, shall correspond
to each of the 3 years for which a license is issued.

(3) The making of a false statement on an annual statement shall constitute grounds on
which the Board may deny the renewal of a license, or subsequently revoke the license, if

§ 25-112 ALCOHOLIC BEVERAGES REGULATION

the renewal of the license is based in whole or in part on the contents of the false
statement.

(Jan. 24, 1934, 48 Stat. 324, ch. 4, § 11; Apr. 30, 1934, 48 Stat 654, ch. 181, § 1; June 18, 1934, 48 Stat.
997, ch. 588; July 2, 1935, 49 Stat. 444, ch. 359; Aug. 27, 1935, 49 Stat. 898, 899, ch. 756, §§ 3-7; June 15,
1938, 52 Stat. 691, ch. 396, §§ 1, 2; May 27, 1949, 63 Stat. 133, ch. 146, title V, § 501; June 29, 1953, 67
Stat. 103, ch. 159, § 404(d); May 31, 1962, 76 Stat. 89, Pub. L. 87-470, § 1; Dec. 8, 1970, 84 Stat 1393,
Pub, L. 91-535, § 2; Apr. 6, 1977, D.C. Law 1-102, § 2(a), (b), 23 DCR 8732; Apr. 18, 1978, D.C. Law
2-73, § 3, 24 DCR 7066; Mar. 5, 1981, D.C. Law 3-157, § 2(b), 27 DCR 5117; Sept 29, 1982, D.C. Law
4-157, §§ 6, 15, 29 DCR 3617; Mar. 10, 1983, D.C. Law 4-204, § 2, 30 DCR 185; Aug. 2, 1983, D.C. Law,
5-16, § 3, 30 DCR 3193; Mar. 8, 1984, D.C. Law 5-51, § 2(a), 30 DCR 5927; Mar. 7, 1987, D.C. Law
6-217, § 5, 34 DCR 907; Aug. 17, 1991, D.C. Law 9-40, § 2(b), 38 DCR 4974; May 24, 1994, D.C. Law
10-122, § 2(e), 41 DCR 1658; Mar. 26, 1999, D.C. Law 12-202, § 2(b), 45 DCR 8412; Apr. 20, 1999, D.C.
Law 12-261, § 2003(q)(l), 46 DCR 3142; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept 30,
2004, D.C. Law 15-187, §§ 101(b), 401(d), 51 DCR 6525.)

Historical and Statutory Notes

Effect of Amendments "The Mayor shall promulgate proposed rules

D.C. Law 15-187, in subsec. (c), added par. (3); and regulations to administer this title within 180

and in par. (2) of subsec. (e), substituted "each of da y s of its effective date. The proposed rules and

the 3 years" for "each of the 2 years". regulations, as well as any subsequent rules and

regulations amending this title, shall be submitted
Legislative History of Laws to the Council for a 45 _ day period of review ,

For Law 15-187, see notes following § 25-101. excluding Saturdays, Sundays, legal holidays, and

Editor's Notes days of Council recess, If the Council does not

Paragraph (2) of subsection (c) of this section a W?» e or * ""approve the rules and regulations in

expired 18 months after May 3, 2001. who ^ or In *"£■■ ^ reso l utl ° 1 n vvlth , the f^

^ ,; review period, the proposed rules and regulations

Miscellaneous Notes shall be deemed approved.

Sections 402 and 403 of D.C. Law 15-187 pro- "Sec. 403. Applicability.

™ e * "Section 401 shall apply upon the effective date

"Sec. 402. Rules and regulations. of the regulations promulgated under section 402."

§ 25-113. On-premises retailer's licenses.

(a)(1) On-premises retailer's licenses shall be classified by the type of establishment
licensed, as follows: restaurant, tavern, nightclub, hotel, club, multipurpose facility, and
common carrier.

(2) For each type of establishment listed in paragraph (1) of this section, there shall be 2
classes of on-premises retailer's license:

(A) Except as otherwise provided, an on-premises retailer's license, class C, shall
authorize the licensee to sell spirits, wine, and beer at the licensed establishment for
consumption only at the licensed establishment.

(B) Except as otherwise provided, an on-premises retailer's license, class D, shall
authorize the licensee to sell wine and beer at the licensed establishment for consumption
only at the licensed establishment.

(3) The licensee of any kind of on-premises retailer's licenses, class C or D, shall not sell
or serve alcoholic beverages in any closed container; provided that:

(A) A hotel may sell and serve alcoholic beverages in closed containers in the private
rooms of registered guests; and

(B) A club may sell and serve alcoholic beverages in closed containers in any room or
area available only to members of the club or their guests.

(4)(A) Except as provided in subparagraph (B) of this paragraph, nothing in the license
classifications in this section shall be construed as prohibiting or restricting a restaurant
from offering entertainment or facilities for dancing, preventing or restricting a tavern
from offering entertainment, or preventing or restricting a nightclub from offering food. A
licensee who offers food, entertainment, or facilities for dancing may advertise the food,
entertainment, or facilities for dancing that are offered, regardless of the kind of license
held.

(B) No licensed establishment other than a nightclub or a legitimate theater may

provide entertainment by nude performers.

ALCOHOLIC BEVERAGES REGULATION § 25-113

(b)(1) A restaurant license (R) shall be issued only for a restaurant. It shall be a
secondary tier violation for a restaurant to not keep its kitchen facilities open until 2 hours
before closing.

(2)(A) The licensee shall file with the Board quarterly statements, on the dates and in
the manner prescribed by the Board, reporting for the preceding quarter: the gross
receipts for the establishment; its gross receipts for sales of alcoholic beverages; its gross
receipts for the sale of food; its total expenses lor the purchase of food and alcoholic
beverages; its expenses for the purchase of food; and its expenses for the purchase of
alcoholic beverages.

(B) The Board shall make a licensee's quarterly statements available for the purpose
of allowing a protestant of a license to determine the gross annual receipts of a licensee.
(3)(A) There shall be 2 classes of restaurant licenses:
(i) Class C/R (spirits, wine, and beer); and
(ii) Class D/R (wine and beer).
(B)(i) A class C/R license may be issued to:

(I) An establishment which qualifies as a restaurant under § 25-101(43)(A) and
has gross annual food sales of at least $2000 per occupant (as determined by the
establishment's Board-approved certificate of occupancy); or

(II) An establishment which qualifies as a restaurant under § 25-101 (43)(B).
(ii) A class D/R license may be issued to:

(I) An establishment which qualifies as a restaurant under § 25-101(43)(A) and
has gross annual food sales of at least $1500 per occupant (as determined by the
establishment's Board-approved certificate of occupancy); or

(II) An establishment which qualifies as a restaurant under § 25-101(43)(B).

(iii) The Board shall, by rule, adjust for inflation the gross annual food sales per

occupant requirements established under subparagraphs (B)(i)(I) and (B)(ii)(I) of this

paragraph once every 5 years. The first adjustment shall be effective January 1, 2010.

In determining the appropriate inflation index to be applied, the Board may consider

the inflation indices customarily employed by the federal and District governments for

similar purposes.

(4) The Board, in its sound discretion, may require that a restaurant (R) licensee file a

security plan with the Board. A restaurant (R) licensee so required shall comply with the

terms of its security plan.

(5)(A) Notwithstanding any other provision of this subchapter, a restaurant license (R)
under this section shall authorize the licensee to permit a patron to remove one partially
consumed bottle of wine for consumption off premises.

(B) A partially consumed bottle of wine that is to be removed from the premises must
be securely resealed by the licensee or its employee before removal from the premises.

(C) The partially consumed bottle shall be placed in a bag or other container that is
secured in such a manner that it is visibly apparent if the container has been subsequent-
ly opened or tampered with, and a dated receipt for the bottle of wine shall be provided
by the licensee and attached to the container.

(c)(1) A tavern license (T) shall be issued only for a tavern.

(2) The size of the dance floor in a tavern that does not possess an entertainment
endorsement shall not exceed 140 square feet; provided, that the licensee whose establish-
ment on September 30, 1986 contained a regularly used dance floor in excess of 140 square
feet and who is occupying the same establishment shall not be disqualified under this
limitation.

(3) There shall be 2 classes of tavern licenses:

(A) Class C/T (spirits, wine, and beer); and

(B) Class D/T (beer and wine).

(4) The Board, in its sound discretion, may require that a tavern (T) licensee file a
security plan with the Board. A tavern (T) licensee so required shall comply with the
terms of its security plan.

(d)(1) A nightclub license (N) shall be issued only to a nightclub with a security plan. The
holder of a nightclub license shall comply with the terms of its security plan.

§ 25-113 ALCOHOLIC BEVERAGES REGULATION

(2) There shall be two classes of nightclub licenses:

(A) Class C/N (spirits, wine, and beer); and

(B) Class D/N (beer and wine).

(e)(1) A hotel license (H) shall be issued only for a hotel license.

(2) The license shall authorize the sale and service of alcoholic beverages for consump-
tion in the dining rooms, lounges, banquet halls, and other similar facilities on the licensed
premises, and in the private rooms of registered guests.

(3) The license shall not authorize the sale and service of alcoholic beverages for
consumption in a nightclub on the premises of the hotel. The licensee may also be issued a
nightclub license on the premises of the hotel.

(4)(A) The licensee shall file with the Board quarterly statements, on the dates and in
the manner prescribed by the Board, reporting for the preceding quarter: the gross
receipts for the establishment; its gross receipts for sales of alcoholic beverages; its gross
receipts for the sale of food; its total expenses for the purchase of food and alcoholic
beverages; its expenses for the purchase of food; and its expenses for the purchase of
alcoholic beverages.

(B) The Board shall make a licensee's quarterly statements available for the purpose
of allowing a protestant to determine the gross annual receipts of a licensee.
(5)(A) There shall be 2 classes of hotel licenses:
(i) Class C/H (spirits, beer, and wine); and
(ii) Class D/H (beer and wine).
(B)(i) A class C/H license may be issued to:

(I) An establishment that has annual gross food sales in a hotel dining room of at
least $2000 per occupant (as determined by the establishment's Board-approved
certificate of occupancy); or

(II) An establishment that has sales of food in a hotel dining room which accounts
for at least 45% of gross annual receipts from the operation of the dining room;
provided, that in the case of a hotel that has 200 or fewer rooms and was built before
January 1, 1940, sales of food shall account for at least 25% of gross annual receipts
from the operation of the dining room.

(ii) A class D/H license may be issued to:

(I) An establishment that has annual gross food sales in a hotel dining room of at
least $1500 per occupant (as determined by the establishment's Board-approved
certificate of occupancy); or

(f)(1) A club license shall be issued only for a club.

(2) No license shall be issued to a club which has not been incorporated for at least one
year immediately before the filing of an application for the license.

(3) The licensee may permit consumption of alcoholic beverages on the parts of the
licensed premises as may be approved by the Board.

(4) There shall be 2 classes of club licenses:

(A) Class C (spirits, beer, and wine); and

(B) Class D (beer and wine).

^ (g)(1) A multipurpose facility license shall be issued only to legitimate theaters, universi-
ties, museums, conference centers, art galleries, or facilities (such as the Lincoln Theatre or
the D.C. Arena) for the performance of sports, cultural, or tourism-related activities.

(2) The licensee may permit consumption of alcoholic beverages on the parts of the
licensed premises as may be approved by the Board.

(3) There shall be 2 classes of multipurpose facility licenses:

(A) Class C (spirits, beer, and wine); and

(B) Class D (beer and wine).

ALCOHOLIC BEVERAGES REGULATION § 25-113

(4) The Board, in its sound discretion, may require that a multipurpose facility licensee
file a security plan with the Board. A multipurpose facility licensee so required shall
comply with the terms of its security plan.

(h)(1) A common carrier license shall be issued only for a passenger-carrying marine vessel
serving food or a railroad club or dining car.

(2) Any person operating a railroad in interstate commerce of 100 miles or more may be
issued a single license covering all of the railroad's dining and club cars. The license shall
identify the railroad dining cars and club cars covered by the license and shall be kept on
display at the licensee's principal place of business in the District.

(3) Any person operating a passenger-carrying marine vessel line in the District may be
issued a single license covering all of its passenger-carrying marine vessels serving food
and its dockside waiting areas for its passengers. The license shall identify the passenger-
carrying marine vessels and dockside waiting areas covered by the license and shall be kept
on display at the licensee's principal place of business in the District. The license issued
shall not cover any permanently berthed vessel.

(4) There shall be 2 classes of common carrier licenses:

(A) Class C (spirits, beer, and wine); and

(B) Class D (beer and wine).

(i)(l) A caterer's license shall be issued only to a caterer.

(2) Notwithstanding any provision of this title, a caterer's license under this subsection
shall authorize the licensee to sell, deliver and serve alcoholic beverages for consumption on
the premises of a catered event at which the licensee is also serving prepared food.

(3) A caterer's license shall be valid for 3 years.

(4) A caterer licensed under this subsection shall file records with, and maintain records
for inspection by, the Board in such manner as the Board shall determine by regulation
promulgated under § 25-2 11(b); provided, that commercial or financial information consid-
ered by the Board to be proprietary information or trade secrets, the disclosure of which
would result in harm to the competitive position of the licensee, shall not be made available
to the public.

(5) Wholesalers and off-premises retailers, class A, may sell alcoholic beverages to
caterers licensed under this subsection for catered events of 100 persons or less. Only off-
premises retailers, class A, may sell alcoholic beverages to caterers licensed under this
subsection for catered events in excess of 100 persons.

(j)(l) Cover charges or the sale of items other than food or beverage shall not be included
in determining an establishment's gross annual food sales or whether the sale of food
accounts for at least 45% of the establishment's gross annual receipts; provided, that
minimum charges that are readily identifiable as food or beverage shall be included in
calculating whether the establishment is meeting the food sales requirements set forth in
§ 25-101(43) and this section.

(2) Off-site food sales by a licensee under a license, class C/R, D/R, C/H, or D/H, shall
also not be included for purposes of calculating whether the establishment is meeting the
food sales requirement set forth in either § 25-101(43) or this section.

(3)(A) Each licensee under a license, class C/R, D/R, C/H, or D/H, shall keep and
maintain on the premises for a period of 3 years adequate books and records showing all
sales, purchase invoices, and dispositions, including the following:

(i) Sales information that includes the date, the price of food sold, the price of
alcoholic beverages sold, and the amount of total sales;

(ii) Purchase information that includes the date and quantity of the purchase, the
name, address, and phone number of the wholesaler and or vendor with the original
invoice; and

(in) Register receipts or guest checks, which may be kept daily or weekly that

include the food sold, the alcoholic beverages sold, and the amount of total sales.

(B) Any licensee may file a written request with the Board to have his books and

records, except the day to day records or register receipts, kept at an accountant's office

or the licensee's office; provided, that the records are made available within 3 days of

request by ABRA staff.

§25-113

ALCOHOLIC BEVERAGES REGULATION

(C) The failure of a licensee under a license, class C/R, D/R, C/H, or D/H, to keep and
maintain records as required by this section shall be subject to the following penalties:

(i) One-quarter of non-compliance shall result in a penalty not to exceed $3,000 and
ABRA monitoring;

(ii) Non-compliance after 2 quarters shall result in a penalty not to exceed $4,500 or
license suspension for a period not to exceed 5 days; or

(iii) Non-compliance after 3 or more quarters shall result in a show cause hearing*
for revocation or a mandatory change in license class.

(D) A violation of this section shall also be a primary tier violation under § 25-830(c).

(Jan. 24, 1934, 48 Stat. 324, ch. 4, § 11; Apr. 30, 1934, 48 Stat. 654, ch. 181, § 1; June 18, 1934, 48 Stat.
997, ch. 588; July 2, 1935, 49 Stat. 444, ch. 359; Aug. 27, 1935, 49 Stat. 898, 899, ch. 756, §§ 3-7; June 15,
1938, 52 Stat. 691, ch. 396, §§ 1, 2; May 27, 1949, 63 Stat. 133, ch. 146, title V, § 501; June 29, 1953, 67
Stat. 103, ch. 159, § 404(d); May 31, 1962, 76 Stat. 89, Pub. L. 87-470, § 1; Dec. 8, 1970, 84 Stat 1393,
Pub. L. 91-535, § 2; Apr. 6, 1977, D.C. Law 1-102, § 2(a), (b), 23 DCR 8732; Apr. 18, 1978, D.C. Law
2-73, § 3, 24 DCR 7066; Mar. 5, 1981, D.C. Law 3-157, § 2(b), 27 DCR 5117; Sept. 29, 1982, D.C. Law
4-157, §§ 6, 15, 29 DCR 3617; Mar. 10, 1983, D.C. Law 4-204, § 2, 30 DCR 185; Aug. 2, 1983, D.C. Law,
5-16, § 3, 30 DCR 3193; Mar. 8, 1984, D.C. Law 5-51, § 2(a), 30 DCR 5927; Mar. 7, 1987, D.C. Law
6-217, § 5, 34 DCR 907; Aug. 17, 1991, D.C, Law 9-40, § 2(b), 38 DCR 4974; May 24, 1994, D.C. Law
10-122, § 2(e), 41 DCR 1658; Mar. 26, 1999, D.C. Law 12-202, § 2(b), 45 DCR 8412; Apr. 20, 1999, D.C.
Law 12-261, § 2003(q)(l), 46 DCR 3142; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30,
2004, D.C. Law 15-187, §§ 101(c), 301(c), 51 DCR 6525; Apr. 13, 2005, D.C. Law 15-354, § 102(a)(2), 52
DCR 2638; Mar. 2, 2007, D.C. Law 16-191, § 47(c), 53 DCR 6794; July 18, 2008, D.C. Law 17-201, § 2(c),
55 DCR 6289; Mar. 25, 2009, D.C. Law 17-353, § 241, 56 DCR 1117; Mar. 25, 2009, D.C. Law 17-361,
§ 2(a), 56 DCR 1204; Mar. 3, 2010, D.C. Law 18-111, § 2082(n)(2), 57 DCR 181.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 15-187 rewrote par. (3) of subsec. (b);
in par. (2) of subsec. (c), substituted "a tavern that
does not possess an entertainment endorsement
shall" for "a tavern shall"; rewrote pars. (1) and
(5) of subsec. (e); rewrote par. (1) of subsec. (g);
in par. (3) of subsec. (i), substituted "be valid for 3
years" for "be valid for 2 years"; and added
subsec. (j). Prior to amendment, par. (3) of sub-
sec. (b), pars. (1) and (5) of subsec. (e), and par. (1)
of subsec. (g) had read as follows:

"(3) There shall be 2 classes of restaurant li-
censes:

"(A) Class C/R (spirits, wine, and beer); and

"(B) Class D/R (wine and beer)."

"(e)(1) A hotel license (H) shall be issued only
for a hotel. Sales of food in a hotel dining room
shall account for at least 45% of gross annual
receipts from the operation of the dining room;
provided, that in the case of a hotel that has 200 or
fewer rooms and was built before January 1, 1940,
sales of food shall account for at least 25% of gross
annual receipts from the operation of the dining
room."

"(5) There shall be 2 classes of hotel licenses:

"(A) Class C/H (spirits, beer, and wine); and

"(B) Class D/H (beer and wine)."

"(g)(1) A multipurpose facility license shall be
issued only for a legitimate theater or a facility
(such as the Washington Convention Center, the
Lincoln Theatre, or the DC Arena) for the per-
formance of sports, cultural, or tourism-related
activities."

D.C. Law 15-354, in subsec. (e)(5)(B), validated a
previously made technical correction.

D.C. Law 16-191 substituted "this section" for
"§ 25-113".

D.C. Law 17-201 added subsecs. (b)(4), (5),
(c)(4), and (g)(4); and rewrote subsec. (d)(1), which
had read as follows:

"(d)(1) A nightclub license (N) shall be issued
only for a nightclub."

D.C. Law 17-353 validated a previously made
technical correction in subsec. (g)(4),

D.C. Law 17-361, in subsec. (b)(1), added the
second sentence.

D.C, Law 18-111, in subsec. (g)(1), deleted "the
Washington Convention Center," following "(such
as".

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2082(n)(2) of Fiscal Year 2010 Budget Sup-
port Second Emergency Act of 2009 (D.C. Act
18-207, October 15, 2009, 56 DCR 8234).

For temporary (90 day) amendment of section,
see § 2082(n)(2) of Fiscal Year Budget Support
Congressional Review Emergency Amendment Act
of 2009 (D.C. Act 18-260, January 4, 2010, 57 DCR
345).

Legislative History of Laws

For Law 15-187, see notes following § 25-101.

Law 15-354, the "Technical Amendments Act of
2004", was introduced in Council and assigned Bill
No. 15-1130 which was referred to the Committee
of the Whole. The Bill was adopted on first and
second readings on December 7, 2004, and Decem-
ber 21, 2004, respectively. Signed by the Mayor
on February 9, 2005, it was assigned Act No.
15-770 and transmitted to both Houses of Con-

ALCOHOLIC BEVERAGES REGULATION

§ 25-115

gress for its review. D.C. Law 15-354 became
effective on April 13, 2005.

For Law 16-191, see notes following § 25-101.

For Law 17-201, see notes following § 25-101.

Law 17-353, the "Technical Amendments Act of
2008", was introduced in Council and assigned Bill
No. 17-994 which was referred to the Committee
of the Whole. The Bill was adopted on first and
second readings on December 2, 2008, and Decem-
ber 16, 2008, respectively. Signed by the Mayor
on January 15, 2009, it w T as assigned Act No.
17-687 and transmitted to both Houses of Con-

gress for its review. D.C. Law 17-353 became
effective on March 25, 2009.

Law 17-361, the "Alcoholic Beverage Enforce-
ment Act of 2008", was introduced in Council and
assigned Bill No. 17-983 which was referred to the
Committee on Public Works and Environment.
The Bill was adopted on first and second readings
on December 2, 2008, and December 16, 2008,
respectively. Signed by the Mayor on January 16,
2009, it was assigned Act No. 17-696 and transmit-
ted to both Houses of Congress for its review.
D.C. Law 17-361 became effective on March 25,
2009.

For Law 18-111, see notes following § 25-101.

Notes of Decisions

2. Club

Applicant that was registered for tax purposes
as a nonprofit organization satisfied requirements
of Club Exception Act, which provided a six-month
"window" for pre-existing private clubs located
within residentially-zoned districts to apply for li-
censure, despite any moratorium on issuance of
new licenses; Act did not require assessment of
whether applicant currently operated as a nonprof-
it organization. Dupont Circle Citizens Ass'n v.
District of Columbia Alcoholic Beverage Control
Bd, 2001, 766 A.2d 59. Intoxicating Liquors <3=
57.1

Applicant's cigarette license satisfied Club Ex-
ception Act's requirement that applicant seeking a
retailer's club license to sell alcohol, during mora-
torium period, hold a valid business license, as well
as Act's evident purpose to limit the class of appli-

cants to established clubs already regulated by
some form of licensure. Dupont Circle Citizens
Ass'n v. District of Columbia Alcoholic Beverage
Control Bd., 2001, 766 A.2d 59. Intoxicating Li-
quors £ &= J 57.1

Undisputed testimony regarding applicant's
combining parts of two adjoining contiguous town-
houses was sufficient evidence that applicant seek-
ing retailer's club license had been "established" at
its location for at least three-years, as was re-
quired by Club Exception Act, which provided a
six-month "window" for pre-existing private clubs
located within residentially-zoned districts to apply
for licensure, despite any moratorium on issuance
of new licenses. Dupont Circle Citizens Ass'n v.
District of Columbia Alcoholic Beverage Control
Bd., 2001, 766 A.2d 59. Intoxicating Liquors €=>
57.1

§ 25-113a. License endorsements.

(a) All license endorsements shall be placed on the applicant's license.

(b) The licensee under a license, class C/R, D/R, C/H, D/H, C/T, and D/T, shall obtain an
entertainment endorsement from the Board to be eligible to have entertainment, a cover
charge, or offer facilities for dancing.

(c) The licensee under an on-premises license, class C/R, D/R, C/H, D/H, C/T, D/T, C/N,
and D/N, shall obtain a sidewalk cafe endorsement or summer garden endorsement from the
Board to be eligible to conduct business operations on a sidewalk cafe or summer garden,
which may include the sale, service, and consumption of alcoholic beverages on outdoor public
or private space.

(Sept. 30, 2004, D.C. Law 15-187, § 301(c), 51 DCR 6525; designated § 301(d), Apr. 13, 2005, D.C. Law
15-354, § 102(a)(1), 52 DCR 2638.)

Historical and Statutory Notes

Legislative History of Laws

For Law 15-187, see notes following § 25-101.
For Law 15-354, see notes following § 25-113.

§ 25-115. Temporary license requirements and qualifications.

(a) A temporary license shall authorize the licensee temporarily to sell or permit the
consumption of alcoholic beverages at the specific premises described for consumption on the
premises where sold. The license may be issued for a banquet, picnic, bazaar, fair, or similar
public gathering where food is served for consumption on the premises. No alcoholic
beverages shall be sold or served to a customer in an unopened container.

§ 25-1.15 ALCOHOLIC BEVERAGES REGULATION

(b) A temporary license shall be issued for no more than 4 consecutive days.

(d) If the applicant has failed to control the environment of a previous event associated
with a temporary license or has sustained community complaints or police action, the Board
may deny the license application.

(e) There shall be 2 classes of temporary licenses:

(1) Class F (beer and wine); and

(2) Class G (spirits, beer, and wine).

(Jan. 24, 1934, 48 Stat. 324, ch. 4, § 11; Apr. 30, 1934, 48 Stat. 654, ch. 181, § 1; June 18, 1934, 48 Stat.
997, ch. 588; July 2, 1935, 49 Stat. 444, ch. 359; Aug. 27, 1935, 49 Stat. 898, 899, ch. 756, §§ 3-7; June 15,
1938, 52 Stat. 691, ch. 396, §§ 1, 2; May 27, 1949, 63 Stat. 133, ch. 146, title V, § 501; June 29, 1953, 67
Stat. 103, ch. 159, § 404(d); May 31, 1962, 76 Stat. 89, Pub. L. 87-470, § 1; Dec. 8, 1970, 84 Stat. 1393,
Pub. L. 91-535, § 2; Apr. 6, 1977, D.C, Law 1-102, § 2(a), (b), 23 DCR 8732; Apr. 18, 1978, D.C. Law
2-73, § 3, 24 DCR 7066; Mar. 5, 1981, D.C. Law 3-157, § 2(b), 27 DCR 5117; Sept. 29, 1982, D.C. Law
4-157, §§ 6, 15, 29 DCR 3617; Mar. 10, 1983, D.C. Law 4-204, § 2, 30 DCR 185; Aug. 2, 1983, D.C. Law,
5-16, § 3, 30 DCR 3193; Mar. 8, 1984, D.C. Law 5-51, § 2(a), 30 DCR 5927; Mar. 7, 1987, D.C. Law
6-217, § 5, 34 DCR 907; Aug. 17, 1991, D.C. Law 9-40, § 2(b), 38 DCR 4974; May 24, 1994, D.C. Law
10-122, § 2(e), 41 DCR 1658; Mar. 26, 1999, D.C. Law 12-202, § 2(b), 45 DCR 8412; Apr. 20, 1999, D.C.
Law 12-261, § 2003(q)(l), 46 DCR 3142; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1,
2002, D.C. Law 14-190, § 1702(c), 49 DCR 6968.)

Historical and Statutory Notes

Effect of Amendments Emergency Act of 2002 (D.C, Act 14-453, July 23,

D.C. Law 14-190 rewrote subsec. (b) which had 2002, 49 DCR 8026).

read as follows: T . , ,. u . , ,. T

Legislative History of Laws

(b) A temporary license may be issued for no ^ T . . inn x „ „ . c rtr ...

more than 2 consecutive days." For Law 14 - 190 > see notes lowing § 25-101.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 1702(c) of Fiscal Year 2003 Budget Support

§ 25-116. Solicitor's license requirements and qualifications.

A solicitor's license shall authorize the licensee to sell any alcoholic beverage on behalf of
the vendor whose name appears upon the license and whom the solicitor represents. A
license shall be issued for only one vendor and a license shall be issued to the solicitor for
each vendor whom the solicitor represents. A solicitor's license shall allow the licensee to
transport samples to and from licensed establishments.

(Jan. 24, 1934, 48 Stat. 324, ch. 4, § 11; Apr. 30, 1934, 48 Stat. 654, ch. 181, § 1; June 18, 1934, 48 Stat.
997, ch. 588; July 2, 1935, 49 Stat. 444, ch. 359; Aug. 27, 1935, 49 Stat. 898, 899, ch. 756, §§ 3-7; June 15,
1938, 52 Stat. 691, ch. 396, §§ 1, 2; May. 27, 1949, 63 Stat. 133, ch. 146, title V, § 501; June 29, 1953, 67
Stat. 103, ch. 159, § 404(d); May 31, 1962, 76 Stat. 89, Pub. L. 87-470, § 1; Dec. 8, 1970, 84 Stat. 1393,
Pub. L. 91-535, § 2; Apr. 6, 1977, D.C. Law 1-102, § 2(a), (b), 23 DCR 8732; Apr. 18, 1978, D.C. Law
2-73, § 3, 24 DCR 7066; Mar. 5, 1981, D.C. Law 3-157, § 2(b), 27 DCR 5117; Sept. 29, 1982, D.C. Law
4-157, §§ 6, 15, 29 DCR 3617; Mar. 10, 1983, D.C. Law 4-204, § 2, 30 DCR 185; Aug. 2, 1983, D.C. Law,
5-16, § 3, 30 DCR 3193; Mar. 8, 1984, D.C. Law 5-51, § 2(a), 30 DCR 5927; Mar. 7, 1987, D.C. Law
6-217, § 5, 34 DCR 907; Aug. 17, 1991, D.C. Law 9-40, § 2(b), 38 DCR 4974; May 24, 1994, D.C. Law
10-122, § 2(e), 41 DCR 1658; Mar. 26, 1999, D.C. Law 12-202, § 2(b), 45 DCR 8412; Apr. 20, 1999, D.C.
Law 12-261, § 2003(q)(l), 46 DCR 3142; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; July 18,
2008, D.C. Law 17-201, § 2(d), 55 DCR 6289.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 17-201 inserted "A solicitor's license For Law 17-201, see notes following § 25-101.

shall allow the licensee to transport samples to and
from licensed establishments."

§ 25-118. Tasting permit requirements and qualifications.

(a) A tasting permit shall be issued only to a licensee under a manufacturer's license, class
B, a retailer's license, class A and B, or an applicant which is a full service grocery store and

ALCOHOLIC BEVERAGES REGULATION § 25-119

meets the requirements of § 25-303(c)(l), (2), and (3), to utilize a portion of their licensed
premises for the tasting of products as listed in subsection (c) of this section.

(b) Containers of alcoholic beverages used for sampling purposes shall be labeled as such
and may not be sold.

(1) 3 ounces of spirits;

(2) 6 ounces of wines; and

(3) 12 ounces of beer.

(d) A tasting permit shall be valid for 3 years.

(e) The holder of a manufacturer's license, class B, may utilize a portion of the licensed
premises for the sampling of beer between the hours of 1:00 p.m. and 9:00 p.m., Thursday
through Saturday.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(d), 51 DCR
6525; July 18, 2008, D.C. Law 17-201, § 2(e), 55 DCR 6289; Oct. 20, 2011, D.C. Law 19-25, § 2, 58 DCR

6513.)

Historical and Statutory Notes

Effect of Amendments Section 4(b) of D.C. Law 19-17 provides that the

D.C. Law 15-187, in subsec' (a), substituted act sha11 ex P ire after 225 da y & of its havin S taken

"class A, or an applicant which is a full service effect.

grocery store and meets the requirements of Emergency Act Amendments

§ 25-303(c)(l), (2), and (3)" for "class A"; and For temporary (90 day) amendment of section,

added subsec. (d). see § 2 of Brewery Manufacturer's Tasting Permit

D.C. Law 17-201, in subsec. (a), substituted ^fZ^Z^zl ^aoL™ 1 (D ' C ' Act

"class A and B" for "class A"; and, in subsec. (d), 19 " 71 > M ^ 19 ' 2011 ' 58 DCR 4235) '
substituted "3 years" for "2 years". For temporary (90 day) amendment of section,

_ „ , ' „,_ . ', . . , ,.. ^ , see § 2 of Brewery Manufacturer's Tasting Permit

D.C Law 19-25, in subsec^ (a), substituted Co iona] Review Emergency Act of 2011

manufacturers license, class B, a retailers h- (DC Act 19 _ 14g A t 9] mi 5g DCR 6m) .
cense, class A and B, or an applicant for retail- ..,.„. ,

er's license, class A and B, or an applicant"; and Legislative H.story of Laws
added subsec (e) For Law 15-187, see notes following § 25-101.

Temporary Amendments of Section For Law 17 - 201 > see notes followin K § 2 ^ 101 '

« ,. n * t* o t -mirr- u / \ Law 19-25, the "Brewery Manufacturer's Tast-

Section I of D.C. Law 19-1 <, m subsec. (a), . ^ ., ' , , A J . „ oni1? , • ,

, ... , , lt ,. , , v , ^ ing Permit Amendment Act of 2011 , was intro-

substituted manufacturers license, class B; re- ^ [n Coundl ^ ^ fim ^ x

tailer s license, class A and B; or an applicant for wWch ^ refemjd tQ ^ Committee on Human

retail** s license, class A and B or an applicant ; ^^ The m wag ^ d m &gt ^ gec _

and added subsec. (e) to read as follows: Qnd rea(]ings Qn June ^ 2Qn> and July ^ 20u?

"(e) The holder of a manufacturer's license, respectively. Signed by the Mayor on July 28,

class B, may utilize a portion of the licensed prem- 2011, it was assigned Act No. 19-102 and transmit-

ises for the sampling of alcoholic beverages be- ted to both Houses of Congress for its review.

tween the hours of 1:00 p.m. and 9:00 p.m., Thurs- D.C. Law 19-25 became effective on October 20,

day through Saturday.". 2011.

§ 25-119. Importation permit requirements and qualifications.

(a) An importation permit shall authorize the licensee to import, transport, or cause to be
imported or transported, alcoholic beverages into the District. An importation permit shall be
issued to the licensee under a retailer's license, class A, B, C, or D, and a pool buying agent if
the Board is satisfied that the alcoholic beverages bearing the same brand or trade name are
not obtainable by the licensee from a licensed manufacturer or wholesaler in the District in
sufficient quantity to reasonably satisfy the immediate needs of the licensee and when the
licensee has paid the appropriate taxes as imposed by Chapter 9.

(b) The permit shall specifically set forth the quantity, character, and brand or trade name
of the alcoholic beverage to be transported and the names and addresses of the seller and the
licensee.

§ 25-119 ALCOHOLIC BEVERAGES REGULATION

(c) The permit shall accompany the alcoholic beverages during transportation in the
District to the licensed premises of the licensee and shall be exhibited upon the demand of
any police officer or duly authorized inspector of the Board.

(d) The permit shall, immediately upon receipt of the alcoholic beverages by the retail
licensee, be marked "canceled" by the licensee.

(Jan. 24, 1934, 48 Stat. 332, ch. 4, § 23; Apr. 30, 1934, 48 Stat. 654, ch. 181, § 3; June 18, 1934, 48 Stat.
1014, 1015, ch. 600, §§ 1, 2; Aug. 27, 1935, 49 Stat. 901, 903, ch. 756, §§ 11, 17; June 25, 1936, 49 Stat.
1921, ch. 804; June 25, 1948, 62 Stat. 991, ch. 646, § 32(b); May 24, 1949, 63 Stat. 107, ch. 139, § 127;
May 27, 1949, 63 Stat. 135, ch. 146, title V, § 505; May 18, 1954, 68 Stat. 113, ch. 218, title VIII, § 801;
Mar. 31, 1956, 70 Stat. 81, ch. 154, title III, §§ 301, 302(a); July 25, 1958, 72 Stat. 418, Pub. L. 85-558,
§§ 1-5; Sept. 14, 1961, 75 Stat, 510, Pub. L. 87-238, §§ 1-5; Mar. 2, 1962, 76 Stat. 17, Pub. L. 87-408,
§ 401; Sept. 30, 1966, 80 Stat. 855, Pub. L. 89-610, title I, § 101(a); Oct. 31, 1969, 83 Stat, 175, Pub. L.
91-106, title V, § 501(a), (b); Apr. 18, 1978, D.C. Law 2-73, § 3, 24 DCR 7066; Sept. 29, 1982, D.C. Law
4-157, § 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(9), 30 DCR 5927; Mar. 14, 1985, D.C.
Law ,5-159, § 25(b), (c), 32 DCR 30; July 25, 1989, D.C. Law 8-17, § 7(a), 36 DCR 4160; May 4, 1990,
D.C. Law 8-119, § 2, 37 DCR 1738; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004,
D.C. Law 15-187, § 401(e), 51 DCR 6525; Mar. 2, 2007, D.C. Law 16-191, § 47(d)(1), 53 DCR 6794.)

Historical and Statutory Notes

Effect of Amendments "Sec. 402. Rules and regulations.

D.C. Law 15-187, in subsec. (a), substituted "An "The Mayor shall promulgate proposed rules

importation permit shall be issued to the licensee and regulations to administer this title within 180

under a retailer's license, class A, B, C, or D, and a days of its effective date. The proposed rules and

pool buying agent" for "An importation permit regulations, as well as any subsequent rules and

shall be issued to the licensee under a retailer's regulations amending this title, shall be submitted

license, class A, B, C, or D,'\ to the Council for a 45-day period of review,

D.C. Law 16-191, in subsec. (a), validated a excluding Saturdays, Sundays, legal holidays, and

previously made technical correction. da y s of Council recess, If the Council does not

T . . ' TT . , _ T approve or disapprove the rules and regulations, in

Legislative History of Laws whole Qr in ^ by reS()lution ^ th the 45 _ day

For Law 15-187, see notes following § 25-101. review periodj the pr0 posed rules and regulations

For Law 16-191, see notes following § 25-101. shall be deemed approved.

Miscellaneous Notes "Sec. 403. Applicability.

Sections 402 and 403 of D.C. Law 15-187 pro- "Section 401 shall apply upon the effective date

vide: of the regulations promulgated under section 402."

§ 25-120. Manager's license requirements and qualifications.

(a) A manager's license shall authorize the licensee to manage a licensed business.

(b) A licensee may be employed by one or more licensed businesses without further
investigation, subject to compliance by the licensed businesses.

(c) A manager's license shall be valid for 2 years or until surrendered, suspended, or
revoked. The fee for both years of the manager's license shall be paid at the time of
application.

(d) A manager shall complete an alcohol training and education certification program
conducted by a Board-approved provider. The manager shall be recertified every 2 years
from the date of the initial certification.

(e) A manager who is licensed on or before May 3, 2001, shall complete a certification
program within 6 months of May 3, 2001.

(f) A manager licensed under this section after May 3, 2001, shall complete the certification
program prior to receiving his or her manager's license.

(g) Subsection (e) of this section shall not apply to a manager licensed on or before May 3,
2001, who provides proof of his or her prior certification within 2 years prior to May 3, 2001.

(h) A manager required to complete an alcohol training and education certification program
under this section shall submit proof of certification to the Board on a form supplied by a
Board-approved training provider.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 26, 2001, D.C. Law 14-42, § 6(a), 48 DCR
7612; Oct. 1, 2002, D.C. Law 14-190, § 1702(d), 49 DCR 6968; Sept. 30, 2004, D.C. Law 15-187, § 101(e),
51 DCR 6525.)

ALCOHOLIC BEVERAGES REGULATION § 25-122

Historical and Statutory Notes

Effect of Amendments For temporary (90 day) amendment of section,

D.C. Law 14-42 validated the previously made see § m2 ^ d ] of fiscal t^ 20 * 03 Budg ? S T U P P ^

technical corrections in subsecs. (e) and (g)/ w^DCRSfm^

D.C. Law 14-190, in subsec. (c), substituted "The Legislative History of Laws

fee for both years of the manager's license shall be Law 14 „ 42 , the "Technical Correction Amend-

paid at the time of application' for The license fee ment Act of 2 ooi", was introduced in Council and

shall be paid as provided under Chapter 5". assigned Bill No. 14-216, which was referred to the

D.C. Law 15-187, in subsec. (f), substituted "pri- Committee of the Whole. The Bill was adopted on

or to receiving" for "within 90 days after receiv- first and second readings on June 5, 2001, and

: n „» * June 26, 2001, respectively. Signed by the Mayor

8 ' on July 24, 2001, it was assigned Act No. 14-107

Emergency Act Amendments and transmitted to both Houses of Congress for its

For temporary (90 day) amendment of section, review. D.C. Law 14-42 became effective on Octo-

see § 6(a) of Technical Amendments Emergency Der *&> 2001.

Act of 2001 (D.C. Act 14-108, August 3, 2001, 48 For Law 14-190, see notes following § 25-101.

DCR 7622). For Law 15-187, see notes following § 25-101.

§ 25-122. Pool buying groups.

(a) A pool buying group shall be created in the following manner:

(1) Prior to commencing operations, a pool buying group shall file with ABRA a copy of
the agreement under which the pool buying group will operate. The ABRA shall review
the agreement and, if the requirements of applicable law and rules are met, shall approve
the agreement.

(2) Any proposed amendment to a pool buying group agreement shall be filed with, and
be approved by, ABRA in the same manner as original agreements before the proposed
amendments shall be effective.

(3) Pool buying agreements shall include:

(A) The name and address the cooperative or pool buying group;

(B) The name of the buying agent for the group;

(D) For each member, the licensee's name, business name, business address, business
phone number, license number, and the date each licensee joined the group;

(E) The signatures of all the members of the pool buying group;

(F) An attestation that the licensee is not a member of more than one pool buying
group at that time; and

(G) The license status of each member.

(b) The buying agent shall be a licensed retailer of alcoholic beverages in the District

(c) A member of the pool buying group shall not be eligible to place an order with the
group until the member has executed the pool buying agreement and the licensee's name,
business name, license number, and the date of membership have been filed with, and
approved by, the ABRA.

(d) Any addition or termination to the membership of the pool buying group shall be
provided to ABRA under the signature of the buying agent. The notice shall include the
effective date of the addition of an new member or the termination of an existing member.
The notice may be in letter form or on official forms which may be promulgated by ABRA.

(e) The transfer, suspension, or revocation of a license held by a member of a pool buying
group shall automatically terminate the licensee from membership in the pool buying group.
(Sept. 30, 2004, D.C. Law 15-187, § 401(f), 51 DCR 6525.)

Historical and Statutory Notes

Legislative History of Laws Miscellaneous Notes

For Law 15-187, see notes following § 25-101. Sections 402 and 403 of D.C. Law 15-187 pro-

vide:

"Sec. 402. Rules and regulations.
19

§ 25-122 ALCOHOLIC BEVERAGES REGULATION

"The Mayor shall promulgate proposed rules approve or disapprove the rules and regulations, in

and regulations to administer this title within 180 whole or in part, by resolution with the 45-day

days of its effective date. The proposed rules and review period, the proposed rules and regulations

regulations, as well as any subsequent rules and shall be deemed approved,

regulations amending this title, shall be submitted <{Q r

to the Council for a 45-day period of review, bec " 4Udl Applicability.

excluding Saturdays, Sundays, legal holidays, and "Section 401 shall apply upon the effective date

days of Council recess, If the Council does not of the regulations promulgated under section 402."

§ 25-123. Farm winery retail license.

(a) A farm winery retail license shall be issued to a farm winery to authorize the licensee to
sell wine:

(1) From the place described for consumption off-premises and to deliver the same in the
sealed bottle or other closed container in which the same was received by the licensee at
the licensed establishment; and

(2) At the licensed establishment for consumption at the licensed establishment.

(b) A licensee under a farm winery retail license may sell and deliver alcoholic beverages
for off-premises consumption only during the hours of sale and delivery specified for a class B
off-premises retail licensee under § 25-722, and may sell and serve alcoholic beverages for
on-premises consumption except as restricted by § 25-724.

(July 18, 2008, D.C. Law 17-201, § 2(f), 55 DCR 6289.)

Historical and Statutory Notes

Legislative History of Laws

For Law 17-201, see notes following § 25-101.

Chapter 2
Alcoholic Beverage Regulation Administration.

Section Section

25-201. Establishment of the Alcoholic Bever- 25-205. Board record-keeping responsibilities.

age Control Board— appointment 25-207. ABRA Director and staff.

and responsibilities. 25-208. Office of the General Counsel.

25-204. Board— functions and duties. 25-210. ABRA funding.

25-204.01. Board — open meetings. 25-211. Regulations.

§ 25-201. Establishment of the Alcoholic Beverage Control Board — appoint-
ment and responsibilities.

(a) There is established an Alcoholic Beverage Control Board. The Board shall be
composed of 7 members. The Mayor, with the advice and consent of the Council and
according to the requirements set forth in § 25-206, shall nominate persons to serve on the
Board. A nomination shall be submitted to the Council for a 90-day period of review,
excluding days of Council recess. If the Council does not approve or disapprove the
nomination by resolution within this 90-day review period, the nomination shall be deemed
disapproved.

(b) The Board shall administer and enforce the provisions of this title and regulations
issued under this title.

(1) Oversee ABRA;

(2) Receive and evaluate applications for licenses, transfers of licenses to new owners,
and renewals of licenses;

(3) Issue, transfer, and renew licenses to qualified applicants;

ALCOHOLIC BEVERAGES REGULATION § 25-201

Note 12

(4) Regularly conduct inspections of the premises and the books and records of all
licensees during day and evening hours and, on a reasonable number of occasions, without
prior notification to the licensee or the licensee's employees, for compliance with the
requirements of this title and regulations issued under this title;

(5) Establish procedures to receive and respond timely to complaints from any person
alleging a violation of any provision of this title or regulations issued under this title;

(6) Conduct investigations, on its own initiative or on the basis of valid complaints, to
identify violations of this title or regulations issued under this title;

(7) Suspend or revoke licenses and impose civil fines as authorized by this title and
regulations issued under this title; and

(8) Refer evidence of criminal misconduct to the Inspector General of the District of
Columbia, the Corporation Counsel, or the United States Attorney for the District, for
investigation and prosecution.

(Jan. 24, 1934, 48 Stat. 321, ch. 4, §§ 4, 6; Aug. 27, 1935, 49 Stat. 897, ch. 756, § 2; Apr. 20, 1948, 62 Stat.
176, ch. 217, § 2; Oct. 28, 1949, 63 Stat. 972, ch, 782, title XI, § 1106(a); Mar. 3, 1979, D.C. Law 2-139,
§ 3205(h), 25 DCR 5740; Sept. 29, 1982, D.C, Law 4-157, §§ 3, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law
5-51, § 2(b)(1), (2), 30 DCR 5927; Sept. 26, 1984, D.C. Law 5-119, § 2, 31 DCR 4040; Mar. 14, 1985, D.C.
Law 5-159, § 25(a), 32 DCR 30; Mar. 7, 1987, D.C. Law 6-217, § 3, 34 DCR 907; May 24, 1994, D.C.
Law 10-122, § 2(b), (c), 41 DCR 1658; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; June 12,
2003, D.C. Law 14-310, § 10, 50 DCR 1092.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 14-310, in subsec. (a), substituted
"deemed disapproved" for "deemed approved".

Legislative History of Laws

Law 14-310, the "Criminal Code and Miscellane-
ous Technical Amendments Act of 2002", was in-
troduced in Council and assigned Bill No. 14-954,

which was referred to the Committee on Whole.
The Bill was adopted on first and second readings
on December 3, 2002, and December 17, 2002,
respectively. Signed by the Mayor on January 22,
2003, it was assigned Act No. 14-622 and transmit-
ted to both Houses of Congress for its review.
D.C. Law 14-310 became effective on June 12,
2003.

Notes of Decisions

1. In general

The Court of Appeals accords considerable def-
erence to Alcoholic Beverage Control Board's
construction of Alcoholic Beverage Regulation Ad-
ministration statute, and will uphold board's in-
terpretation of statute and legislative enactments
affecting it as long as the interpretation is rea-
sonable and not plainly wrong or inconsistent
with the legislative purpose. 800 Water Street,
Inc. v. District of Columbia Alcoholic Beverage
Control Bd, 2010, 992 A.2d 1272. Intoxicating
Liquors <£=> 130.5

7. Hearings

Alcohol Beverage Control Board's disqualifying
member, who had previously testified before the
Board in opposition to applicant's earlier applica-
tion for an alcoholic beverage license, once member
declined the request to recuse himself was not an
abuse of discretion; member's alleged bias
stemmed from a source other than prior service as
a Board member and his public pronouncements
on essentially the same factual issue he would be
judging as Board member gave rise to a reason-
able question as to his impartiality. Dupont Circle
Citizens Ass'n v. District of Columbia Alcoholic

Beverage Control Bd., 2001, 766 A.2d 59. Admin-
istrative Law And Procedure <5=> 314; Intoxicating
Liquors < 3= 5 70

Alcohol Beverage Control Board had no reason
to disqualify member who had been replaced as
chair of the Board, but continued to hold position
on Board, from proceeding on application for re-
tailer's license. Dupont Circle Citizens Ass'n v.
District of Columbia Alcoholic Beverage Control
Bd., 2001, 766 A.2d 59. Administrative Law And
Procedure C=> 314; Intoxicating Liquors &=> 70

12. Review

The Court of Appeals accords great weight to
Alcoholic Beverage Control Board's construction of
ambiguous provisions of Alcoholic Beverage Regu-
lation Administration statute, and will defer to and
uphold board's interpretation of statute and legis-
lative enactments affecting it as long as the inter-
pretation is reasonable and not plainly wrong or
inconsistent with the legislative purpose. Holzsag-
er v. District of Columbia Alcoholic Beverage Con-
trol Bd., 2009, 979 A.2d 52. Intoxicating Liquors
<£=> 130.5

§ 25-204 ALCOHOLIC BEVERAGES REGULATION

§ 25-204. Board — functions and duties.

Historical and Statutory Notes

Emergency Act Amendments "Sec. 3. Subsidies for officers.

For temporary (90 day) provisions, see § 3 of "As of July 28, 2008, the Alcoholic Beverage

Mt. Pleasant, Targeted Ward 2, and Targeted Regulation Administration shall provide subsidies
Ward 6 Single Sales Moratorium Congressional for officers that participate m the Pilot Subsidy
Review Emergency Act of 2008 (D.C. Act 17-564, Program for Reimbursable Details, in entertam-

October 27, 2008, 55 DCR 12024). ment ai \ eas durm £ late m S ht closm f times , and

approved special events. Receipts for weekend
Miscellaneous Notes nights prior to July 28, 2008 shall be considered

Section 3 of D.C. Law 17-287 provides: under the law in place prior July 28, 2008."

§ 25-204.01. Board — open meetings.

(a) This section shall be construed broadly to maximize public access to meetings. Excep-
tions to open meetings shall be construed narrowly.

(b)(1) "For the purposes of this section, the term "meeting" means any gathering of a
quorum of the members of the Board, including hearings and roundtables, whether regular,
special, or emergency, at which the members consider, conduct, or advise on public business,
including gathering information, taking testimony, discussing, and voting.

(2) A chance meeting or social encounter does not constitute a meeting unless it is held
to evade the letter or spirit of this section.

(3) The term "meeting" does not include:

(A) Discussions by members of the Board on logistical and procedural methods to
schedule and regulate a meeting;

(B) Any on-site inspection of any project or program; and

(C) General discussions among Board members on issues of interest to the public held
in a planned or unplanned social, educational, informal, ceremonial, or similar setting
when there is no intent to conduct public business, nor for the discussion to lead to an
official action, even if a quorum is present and public business is discussed.

(c)(1) Except as provided in paragraph (2) of this subsection, a meeting shall be open to the
public.

(2) A meeting, or portion of a meeting, may be exempt from the requirement in
paragraph (1) of this subsection because of the following:

(A) Statute or court order;

(B) Contract negotiations;

(C) Attorney-client privilege: To consult with an attorney, in order to preserve the
attorney-client privilege between an attorney and the Boards, and to approve settlement
agreements; provided, that nothing herein shall be construed to permit the Board to
close a meeting that would otherwise be open merely because the Board's attorney is a
participant;

(D) Personnel matters. Discussion of the appointment, employment, assignment,
promotion, performance evaluation, compensation, discipline, demotion, removal, or resig-
nation of government appointees, employees, or officials, unless the person requests a
public meeting;

(E) Quasi-judicial functions: Meetings held by the Board exercising quasi-judicial
functions that are held solely for the purpose of deliberating or making a decision in an
adjudication action or proceeding;

(F) Enforcement: To plan, conduct, discuss, or hear reports concerning investigations
of alleged criminal or civil misconduct or violations of federal or District law; or

(G) Executive functions: To discuss the administration of a current District or federal
statute, regulation, or procedure.

(3) A public body that meets in closed session may not discuss or consider any official
matter other than matters listed in paragraph (2) of this subsection.

(4) No resolution, rule, act, regulation, or other official action shall be effective unless
taken, made, or enacted at an open meeting.

ALCOHOLIC BEVERAGES REGULATION § 25-205

(d)(1) Before a meeting or portion of a meeting may be closed, the Board shall meet in
public session at which a majority of the members of the public body who are present vote in
favor of a motion for closure pursuant to an exemption listed under subsection (c)(2) of this
section.

(2) The motion shall state the reason for closing the meeting and include a listing of the
topics to be discussed. The Chairperson of the Board shall conduct and record a roll call
vote on the motion.

(3) At the conclusion of the closed meeting, the Board shall reconvene in public session,
to summarize, to the extent consistent with the applicable reason for closure, the matters
discussed or considered at the closed session, and, if appropriate, take official action.

(July 18, 2008, D.C. Law 17-201, § 3(b), 55 DCR 6289.)

Historical and Statutory Notes

Legislative History of Laws

For Law 17-201, see notes following § 25-101.

§ 25-205. Board record-keeping; responsibilities.

(a) The Board shall maintain complete and accurate records of all action taken on:

(1) Applications for licenses; and

(2) Recommendations for, and remonstrances against, the granting of licenses.

(b) The Board shall maintain the records in a manner readily accessible for inspection by
the public during normal business hours.

(c) The Board shall provide to the Director and the Council annual reports detailing the
activities of the Board for the previous year regarding the following items:

(1) Licenses, including the number of licenses outstanding; the number of new alcohol
licenses and permits issued; the number of alcohol licenses and permits renewed; the
number of licenses suspended; and the number of licenses revoked;

(2) Enforcement, including the number of regulatory inspections performed and the
number of investigations conducted;

(3) The workload of the Board, including the number of adjudicated cases processed; the
number of hearings conducted; and the number of show cause cases pending;

(4) Community notification efforts, including the number of ANC notifications issued; the
number of ANC meetings attended by Board members; and the number of community
meetings attended by Board members; and

(5) Revenue generated by Board actions, including revenue generated by the Board from
permits and licenses and from fines.

(d) The Board shall provide to the office of each ANC, on a quarterly basis, a list of all
licenses due to expire during the ensuing 6 months.

(Jan. 24, 1934, 48 Stat. 322, ch. 4, §6; Aug. 27, 1935, 49 Stat. 897, ch. 756, § 2; Sept. 29, 1982, D.C. Law
4-157, §§ 3, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(2), 30 DCR 5927; Mar. 7, 1987, D.C.
Law 6-217, § 3, 34 DCR 907; May 24, 1994, D.C. Law 10-122, § 2(c), 41 DCR 1658; May 3, 2001, D.C.
Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(f), 51 DCR 6525.)

Historical and Statutory Notes

Effect of Amendments expire in the areas that the ANC will represent

D.C. Law 15-187 rewrote subsec. (d) which had during the ensuing 6 months."

read as follows: Legislative History of Laws

"(d) The Board shall provide to each ANC of- „ T 1C 1or7 , „ „ . c nr 1A1

fice, on a quarterly basis, a list of licenses due to For Law 15-187, see notes following & 25-101.

§ 25-207 ALCOHOLIC BEVERAGES REGULATION

§ 25-207. ABRA Director and staff.

Historical and Statutory Notes

Miscellaneous Notes "Notwithstanding any other provision of law, the
Short title: Section 6022 of D.C. Law 17-21.9 Director of the Alcoholic Beverage Regulation Ad-
provided that subtitle H of title VI of the act may ministration shall have the authority to issue
be cited as the "Targeted Grant-Making Authority grants, as directed in the Fiscal Year 2009 Budget
for the Director of the Alcoholic Beverage Regula- Request Act, passed on final reading on May 13,
tion Administration Act of 2008". 2008 (Enrolled version of Bill 17-679) (Act'), to
Section 6023 of D.C. Law 17-219 provides: effectuate the purposes of the Act."

§ 25-208, Office of the General Counsel.

Historical and Statutory Notes

Delegation of Authority Code Enactment and Related Amendments Act of

Delegation of Authority Pursuant, to D.C. Law 2001, see Mayor's Order 2001-102, July 23, 2001

13-298, the Title 25, D.C. Code Enactment and (48 DCR 7792).

Related Amendments Act of 2001, see Mavor's

Order 2001-96, June 28, 2001 (48 DCR 6277).

Miscellaneous Notes
Partial Rescission of Delegation of Authority

Pursuant to DC Law 13-298, the Title 25, DC

§ 25-210. ABRA funding.

(a) There is established a fund designated as the Alcoholic Beverage Regulation Adminis-
tration Fund, which shall be separate from the General Fund of the District of Columbia. All
funds obtained from alcoholic beverage licensing and permitting fees shall be deposited into
the ABRA Fund without regard to fiscal year limitation pursuant to an act of Congress. All
fees deposited into the ABRA Fund shall not revert to the General Fund of the District of
Columbia at the end of any fiscal year or at any other time, but shall be continually available
for the uses and purposes set forth in this subsection, subject to authorization by Congress in
an appropriations act. The funds deposited in the ABRA Account shall be used to fund the
expenses of ABRA in the discharge of its administrative and regulatory duties. Funds
obtained from penalties and fines, as prescribed by Chapter 8 of this title, shall be credited to
the General Fund of the District of Columbia.

(b) The Mayor shall submit to the Council, as part of the annual budget, a budget for
ABRA and a request for an appropriation for expenditures from the ABRA Fund. This
estimate shall include expenditures for salaries, fringe benefits, overhead charges, training,
supplies, technical, professional, and any and all other services necessary to discharge the
duties and responsibilities of ABRA.

(May 3, 2001, D.C, Law 13-298, § 101, 48 DCR 2959; Oct. 3, 2001, D.C. Law 14-28, § 3002(b), 48 DCR
6981; Mar. 13, 2004, D.C. Law 15-105, § 59, 51 DCR 881.)

Historical and Statutory Notes

Effect of Amendments fund the expenses of ABRA in the discharge of its
D.C. Law 14-28 substituted ABRA Fund" for administrative and regulatory duties. Funds ob-
"ABRA Account''' in subsec. (b); and rewrote sub- tained from penalties and fines, as prescribed by
sec. (a) which had read as follows: Chapter 8, shall be credited to the General Fund."
"(a) Thfre is established within the General D , a Law 15-105, in subsec. (a), validated a
Fund ot the Dis net of Columbia an account desig- eviously made technieal colTection .
nated as the Alcoholic Beverage Regulation Ad-
ministration Account, to which all funds obtained Emergency Act Amendments
from alcoholic beverage taxes and licensing and For temporary (90 day) amendment of section,
permitting fees shall be credited. Any monies de- see §§ 2702(b) and 2703 of Fiscal Year 2002 Bud-
posited in the ABRA Account but not expended in get Support Emergency Act of 2001 (D.C. Act
a fiscal year shall be returned to the General 14-124, August 3, 2001, 48 DCR 7861).
Fund. Subject to the applicable laws relating to the ' . JJ . ' T
appropriation of District funds, monies received Legislative History of Laws
and credited to the ABRA Account shall be used to For Law 14-28, see notes following § 25-101.

ALCOHOLIC BEVERAGES REGULATION § 25-211

Law 15-105, the "Technical Amendments Act of Section 9026 of D.C. Law 19-21 provides:

2003", was introduced in Council and assigned Bill « Sec# 9026 ABC-Keg Registration Fees.
No. 15-437, which was referred to the Committee

of the Whole. The Bill was adopted on first and Notwithstanding any other law, the funds which

second readings on November 4, 2003, and Decern- are deposited in the fund designated for account-

ber 2, 2003, respectively. Signed by the Mayor on J"K Purposes by the Office of the Chief Financial

January 6, 2004, it was assigned Act No. 15-291 ° ffic f as ±u ^ 601S mthm th ? Akoholic Beverage

and transmitted to both Houses of Congress for its Regulation Administration shall be deposited in

review. D.C. Law 15-105 became effective on ^ f cohohc *T? g * : Re ^ 10n ^ mm 1 lstratl ^ n

March 13 2004 Fund, established by D.C. Official Code

*■' * § 25-210(a), and shall not be accounted for by a

Miscellaneous Notes separate fund or account. Any unexpended funds

D.C. Law 14-28, § 3003 provides that: "This in fund 6018 on the effective date of this subtitle
title [Title XXX of Law 14-28] shall apply as of shall be transferred to the Alcoholic Beverage

May 3, 2001." Regulation Administration Fund."

§ 25-211. Regulations.

(a)(1) Within 180 days after May 3, 2001, the Mayor shall issue conforming regulations
necessary or appropriate to carry out the provisions of this title.

(2) The Mayor shall submit the proposed regulations to the Council for a 45-day period
of review. The Council may approve the proposed regulations in whole or in part. If the
Council has not approved the regulations upon expiration of the 45-day review period, the
regulations shall be deemed disapproved.

(3) The current regulations in Chapter 23 of the District of Columbia Municipal
Regulations shall remain in effect until the Council approves new regulations as provided in
this subsection.

(b)(1) The Mayor shall submit other proposed regulations to the Council for a 90-day
period of review.

(2) The Council may approve the proposed regulations in whole or in part. If the
Council has not approved the regulations upon expiration of the 90-day review period, the
regulations shall be deemed disapproved.

(3) The Mayor may submit proposed regulations under this subsection regarding the
regulation of promotional events such as pub crawls.

(c) The Mayor may in any time of public emergency, without previous notice or advertise-
ment, prohibit the sale of any or all alcoholic beverages.

(d)(1) Any regulations promulgated under this section shall become effective 5 days after
being published in the District of Columbia Register.

(2) Within 30 days after their promulgation, the regulations shall also be published in a
newspaper of general circulation in the District. Failure to do so shall not affect the
validity of the regulations.

(e) Within 180 days after May 3, 2001, the Board shall implement a process to provide
additional notification, via electronic media, to the public and Advisory Neighborhood Com-
missions of the publication of proposed and adopted regulations.

(f) The Board shall establish, under subsection (b) of this section, procedures to implement
§ 25-601 to:

(1) Receive written complaints from the public, regarding community concerns about the
activity at a site;

(2) Conduct protest hearings regarding community concerns filed under paragraph (1) of
this subsection; and

(3) Place restrictions upon the number, nature, or size of events permitted at a site,
based on findings of fact and conclusions of law determining that events at the site have

§ 25-211

ALCOHOLIC BEVERAGES REGULATION

violated District of Columbia law and created parking, trash, noise, congestion or other
alcohol-related problems which have been substantially injurious to neighborhood residents.

(Jan. 24, 1934, 48 Stat. 322, ch. 4, § 7, June 29, 1953, 67 Stat. 102, ch. 159,§ 404(a); Oct. 4, 1961, 75 Stat.
820, Pub. L. 87-389, § 3; Aug. 2, 1968, 82 Stat. 616, Pub. L. 90-450, title IV, § 403; Sept. 22, 1970, 84
Stat. 853, Pub. L. 91-405, title II, § 204(f); Jan. 5, 1971, 84 Stat. 1940, Pub. L. 91-650, title VII, § 706;
Mar. 5, 1981, D.C. Law 3-157, § 2(a), 27 DCR 5117; July 24, 1982, D.C. Law 4-131, § 501, 29 DCR 2418;
Sept. 29, 1982, D.C. Law 4-157, §§ 4, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(3), 30 DCR
5927; Feb. 24, 1987, D.C. Law 6-192, § 26(a), 33 DCR 7836; Mar. 7, 1987, D.C. Law 6-217, § 4, 34 DCR
907; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 26, 2001, D.C. Law 14-42, § 6(b), 48 DCR
7612; Mar. 13, 2004, D.C. Law 15-105, § 26(b)(1), 51 DCR 881; Sept 30, 2004, D.C. Law 15-187, § 101(g),
51 DCR 6525.)

Historical and Statutoiy Notes

Effect of Amendments

D.C. Law 14^2 validated the previously made
technical corrections in § 25-211.

D.C. Law 15-105 validated a previously made
technical correction.

D.C. Law 15-187, in subsec. (b), substituted
"90-day period of review" for "45-day period of
review" in par. (1), and substituted "90-day review
period, the regulations shall be deemed disap-
proved" for "45-day review period, the regulations
shall be deemed approved" in par, (2).

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 6(b) of Technical Amendments Emergency
Act of 2001 (D.C. Act 14-108, August 3, 2001, 48
DCR 7622).

Legislative History of Laws

For Law 14-42, see notes following § 25-120.

For Law 15-105, see notes following § 25-210.

For Law 15-187, see notes following § 25-101.
Delegation of Authority

Delegation of Authority Pursuant to D.C. Law
13-298, the Title 25, D.C. Code Enactment and
Related Amendments Act of 2001, see Mayor's
Order 2001-96, June 28, 2001 (48 DCR 6277).

Resolutions

Resolution 15-339, the "Revised Alcoholic Bev-
erage Regulations Approval and Disapproval Reso-
lution of 2003", was approved effective December
2,2003.

Resolution 16-292, East Dupont Circle Liquor
License Moratorium Approval Resolution of 2005",
was approved effective September 20, 2005.

Resolution 16-350, the "West Dupont Circle Li-
quor License Moratorium Rulemaking Approval

Resolution of 2005", was approved effective No-
vember 1, 2005.

Resolution 17-266, the "Adams Morgan Liquor
License Moratorium Amendment Approval Resolu-
tion of 2007", was approved effective July 10, 2007.

Resolution 17-336, the "H Street Moratorium
Emergency Approval Resolution of 2007", was ap-
proved effective July 10, 2007.

Resolution 17-516, the "Administrative Review
Process Approval Resolution of 2008", was ap-
proved effective February 5, 2008.

Resolution 17-910, the "Glover Park Liquor Li-
cense Moratorium Approval Resolution of 2008",
was approved effective December 16, 2008.

Resolution 17-911, the "West Dupont Circle Li-
quor License Moratorium Amendment Approval
Resolution", was approved effective December 16,
2008.

Resolution 17-912, the "Adams Morgan Liquor
License Moratorium Approval Resolution of 2008",
was approved effective December 16, 2008.

Resolution 18-521, the "West Dupont Circle
Moratorium Zone Regulations Approval Resolution
of 2010", was approved effective June 29, 2010.

Resolution 18-522, the "East Dupont Circle
Moratorium Zone Regulations Approval Resolution
of 2010", was approved effective June 29, 2010.

Resolution 18-540, the "Drinking and Driving
Warning Sign Regulation Approval Resolution of
2010", was approved effective July 13, 2010.

Resolution 18-700, the "Off Site Food Sales
Approval Resolution of 2010", was approved effec-
tive December 21, 2010.

Resolution 18-701, the "Georgetown Moratorium
Zone Revised Approval Resolution of 2010", was
approved effective December 21, 2010.

Chapter 3
Requirements to Qualify for License.

Subchapter I. Applicant Qualifications.

Section

25-301. General qualifications for all appli-
cants.

Section

25-303. Restrictions on holding a conflicting

interest.

ALCOHOLIC BEVERAGES REGULATION

§ 25-301

Section

Subchapter II. Qualification
of Establishment.

25-311. General provisions — qualification of
establishment.

25—313. Appropriateness standard.

25-314. Additional considerations for new li-
cense application or transfer of li-
cense to a new location.

Subchapter III. Denial of License.

25-331. Quotas — off-premises retail licenses.

25-332. Moratorium on class B licenses.

25-333. Limitation on the distance between
off-premises retailer's licenses.

25-334. Denial — Board-certified referendum.
[Repealed]

25-335. Denial — public health and safety re-
strictions.

25-336. Retail license prohibited in residential-
use district.

25-340. Special restrictions for Ward 4.

25-340.01 . Special restrictions for Ward 4.

25-341. Targeted Ward 4 Moratorium Zone.

25-341.01. Targeted Ward 4 Moratorium Zone.

Section

25-342.

25-343.
25-344.

25-345.
25-346.

Special restrictions for off-premises

retailer's license in Ward 7.
Special restrictions for off-premises

retailer's license in Ward 8.
Special restrictions for off-premises

retailer's license in Mt. Pleasant.
Ward 2 restrictions for off-premises

retailer's license.
Ward 6 restrictions for off-premises

retailer's license.

Subchapter IV. Board-created Moratoria.

25-351.
25-352.
25-353.

25-354.

25-371.

25-374.

Board-created moratoria.
Procedures to request a moratorium.
Notice requirements for moratorium

proceedings.
Board review of moratorium request.

Subchapter VI. Moratorium

on Establishments Which

Permit Nude Dancing.

Moratorium on establishments which

permit nude dancing.
Transfer of location of establishments

which permit nude dancing.

Subchapter I. Applicant Qualifications.

§ 25-301. General qualifications for all applicants.

(a) Before issuing, transferring to a new owner, or renewing a license, the Board shall
determine that the applicant meets all of the following criteria:

(1) The applicant is of good character and generally fit for the responsibilities of
licensure.

(2) The applicant is at least 21 years of age.

(3) The applicant has not been convicted of any felony in the 10 years before filing the
application.

(4) The applicant has not been convicted of any misdemeanor bearing on fitness for
licensure in the 5 years before filing the application.

(5) Except in the case of an application for a solicitor's license, the applicant is the true
and actual owner of the establishment for which the license is sought, and he or she intends
to cany on the business for himself or herself and not as the agent of any other individual,
partnership, association, limited liability company, or corporation not identified in the
application.

(6) The licensed establishment will be managed by the applicant in person or by a Board-
licensed manager.

(7) The applicant has complied with all the requirements of this title and regulations
issued under this title.

(b) Notwithstanding § 47-2861 (1)(B), the Board shall not issue a license or permit to an
applicant if the applicant has failed to file required District tax returns or owes more than
$ 100 in outstanding debt to the District as a result of the items specified in § 47-2862(a)(l)
through (9), subject to the exceptions specified in § 47-2862 (b).

(c) To determine whether an applicant for a new retailer or wholesaler license meets the
criteria of subsection (a)(3) and (4) of this section, the Board may obtain criminal history
records of criminal convictions maintained by the Federal Bureau of Investigation and the
Metropolitan Police Department. The Board shall:

(1) Inform the applicant that a criminal background check will be conducted;

§ 25-301

ALCOHOLIC BEVERAGES REGULATION

(2) Obtain written approval from the applicant to conduct a criminal background check;

(3) Coordinate with the Metropolitan Police Department to obtain a set of qualified
fingerprints from the applicant; and

(4) Obtain any additional identifying information from the applicant that is required for
the Metropolitan Police Department and the Federal Bureau of Investigation to complete a
criminal background check.

(d) The Board shall coordinate with the Metropolitan Police Department to adopt proce-
dures necessary to facilitate this objective.

(e) The fingerprint card shall not be maintained by the Board or by the Metropolitan
Police Department and shall be returned to the applicant after the completion of the criminal
background check.

(f) Once notified, the Board shall seal, set aside, expunge, and otherwise maintain any
record received pursuant to this section so that the record is in compliance with any order
issued by the Superior Court of the District of Columbia pursuant to a sealing, set aside, or
expungement statute, including Chapter 8 of Title 16 and Chapter 9 of Title 24. Once
notified, the Board shall also seal, set aside, expunge, and otherwise maintain any record
received pursuant to this section so that the record is in compliance with any court order or
official government request or statement from the jurisdiction that is the source of that
record.

(g) The Board shall maintain the confidentiality of any information returned from the
Metropolitan Police Department and the Federal Bureau of Investigation and use such
information only for the purpose of determining whether the applicant satisfies the criteria
set forth in subsection (a)(3) and (4) of this section.

(Jan. 24, 1934, 48 Stat. 327, eh. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 2, 2007, D.C, Law
16-192, § 1012(a), 53 DCR 6899; Mar. 25, 2009, D.C. Law 17-353, § 132, 56 DCR 1117; Nov. 6, 2010, D.C.
Law 18-259, § 6, 57 DCR 5591.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 16-192 designated subsec. (a); and
added subsec. (b).

D.C. Law 17-353 validated a previously made
technical correction in subsec. (b).

D.C. Law 18-259 added subsecs. (c), (d), (e), (f),
and (g).

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 1012(a) of Fiscal Year 2007 Budget Support
Emergency Act of 2006 (D.C. Act 16-477, August
8, 2006, 53 DCR 7068).

For temporary (90 day) amendment of section,
see § 1012(a) of Fiscal Year 2007 Budget Support
Congressional Review Emergency Act of 2006
(D.C. Act 16-499, October 23, 2006, 53 DCR 8845).

For temporary (90 day) amendment of section,
see § 1012(a) of Fiscal Year 2007 Budget Support
Congressional Review Emergency Act of 2007
(D.C. Act 17-1, January 16, 2007," 54. DCR 1165).

Legislative History of Laws

Law 16-192, the "Fiscal Year Budget Support
Act of 2006", was introduced in Council and as-
signed Bill No. 16-679, which was referred to the
Committee of the Whole. The Bill was adopted on
first and second readings on May 9, 2006, and June
6, 2006, respectively. Signed by the Mayor on
August 8, 2006, it was assigned Act No. 16-476 and
transmitted to both Houses of Congress for its
review. D.C. Law 16-192 became effective on
March 2, 2007.

For Law 17-353, see notes following § 25-113.

Law 18-259 , the "Community Impact Statement
Amendment Act of 2010", was introduced in Coun-
cil and assigned Bill No. 18-549, which was re-
ferred to the Committee on Public Safety and the
Judiciary. The Bill was adopted on first and sec-
ond readings on May 4, 2010, and June 1, 2010,
respectively. Signed by the Mayor on June 28,
2010, it was assigned Act No. 18-446 and transmit-
ted to both Houses of Congress for its review.
D.C. Law 18-259 became effective on November 6.
2010.

ALCOHOLIC BEVERAGES REGULATION § 25-303

Notes of Decisions

Due process 1.5 Regulation Administration; District of Columbia
law did not vest either an applicant with an entitle-
ment to acquire a license or a licensee with an
1.5. Due process entitlement to maintain a license. Jones v. Dela-
Night club owner had no due process property ney, 2009, 610 F.Supp.2d 46. Constitutional Law
interest in liquor license, which was allegedly re- ^ 4289; Intoxicating Liquors <$==> 99; Intoxicating
voked by District of Columbia Alcoholic Beverage Liquors <3=> 106(1)

§ 25-303. Restrictions on holding a conflicting interest

(a) Before issuing, transferring to a new owner, or renewing a license, the Board shall
determine that the applicant is not disqualified because of a conflicting interest in another
license, as follows:

(1) No licensee under a manufacturer's or wholesaler's license shall hold a license of any
other class or kind.

(2) No licensee under an on-premises retailer's license, class C or D, shall hold any other
license except an on-premises retailer's license, class C or D, or a caterer's license.

(3) No licensee under an off-premises retailer's license, class A or B, shall hold an
interest in any other license.

(b) The Board shall not reject, solely on the basis of this section, the application of a
franchisee who controls, or will control, the entire interest in the receipts, profits, inventory,
purchases, pricing, and sales of beverages under the license, if the franchisee held a license,
or had an application for a license pending, on June 22, 1982.

(c) The requirements of this section shall not apply to an applicant for an off-premises
retailer's license, class B, for the sale of alcoholic beverages in an establishment if:

(1) The primary business and purpose is the sale of a full range of fresh, canned, and
frozen food items, and the sale of alcoholic beverages is incidental to the primary purpose;

(2) The sale of alcoholic beverages constitutes no more than 15% of the total volume of
gross receipts on an annual basis;

(3) The establishment is located in a C-l, C-2, C-3, C-4, or C-5 zone or, if located within
the Southeast Federal Center, in the SEFC/C-R zone;

(4) The establishment is a full service grocery store which is newdy constructed with a
certificate of occupancy issued after January 1, 2000, or is an existing store which has
undergone renovations in excess of $500,000 after January 1, 2000;

(5) The opinion of the ANC, if any, has been given great weight; and

(6) The applicant does not hold a manufacturer's or wholesaler's license.

(d)(1) A manufacturer, or its affiliate, licensed under this title, may hold an interest in a
limited partnership providing financial assistance to a general partner wholesaler as described
in paragraph (2) of this subsection, but shall only exercise such control of the limited
partnership business as is permitted by this chapter. The limited partner shall not have or
exercise managerial control or decision-making authority with respect to daily operations of
the limited partnership. Upon a default by the general partner wholesaler, the limited
partner shall not acquire or assume additional control, ownership, or financial interest in the
limited partnership. The manufacturer, or its affiliate licensed in the District shall not have a
financial or ownership interest in the general partner wholesaler.

(2) The only financial assistance allowed pursuant to paragraph (1) of this subsection
shall be the initial financial assistance to the limited partnership to acquire a licensed beer
wholesaler. In that arrangement for financial assistance, the wholesaler license issued
under this title shall be issued in the name of the general partner wholesaler on behalf of
the limited partnership, and shall not be issued in the name of the limited partnership nor
in the name of the manufacturer, or its affiliate.

(3) The limited partnership providing the financial assistance described in this section
shall not exist for more than 10 years from the date of its creation, and shall not be
recreated, renewed, or extended beyond that date.

(4) This section shall not amend or otherwise alter this title, except for the limited
purpose of allowing a manufacturer, or its affiliate, which is licensed in the District, to

§ 25-303 ALCOHOLIC BEVERAGES REGULATION

provide financial assistance to a limited partnership for the exclusive purpose of acquiring a
licensed beer wholesaler. A manufacturer or its affiliate shall not require the wholesaler to
use the financial assistance as described above.

(Jan. 24, 1934, 48 Stat, 327, ch. 4, § 12; Sept. 29, 1982, D.C. Law 4-157, § 7, 29 DCR 3617; Mar. 7, 1987,
D.C. Law 6-217, § 7, 34 DCR 907; Aug. 17, 1991, D.C. Law 9-40, § 2(c), 38 DCR 4974; May 3, 2001,
D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law 14-190, § 1702(e), 49 DCR 6968; Sept. 30,
2004, D.C. Law 15-187, § 101(i), 51 DCR 6525; Mar. 25, 2009, D.C. Law 17-361, § 2(b), 56 DCR 1204;
Oct. 20, 2011, D.C. Law 19-23, § 2(b), 58 DCR 6509.)

Historical and Statutory Notes

Effect of Amendments east Federal Center, in the SEFC/C-R zone;" for

D.C. Law 14-190, in subsec. (c), substituted a semicolon; and, in subsec. (c)(5), substituted ";

"during the preceding 12 months" for "in the cab and" for a period at the end.

endar year" and made a nonsubstantive change in Section 4(b) of D.C. Law 18-346 provides that

par. (4), made a nonsubstantive change in par. (5), the act shall expire after 225 days of its having

and added par. (6). taken effect.

D.C. Law 15-187 rewrote par. (5) of subsec. (c); Emergency Act Amendments

and added subsec. (d). Prior to amendment, par. For temporary (90 day) amendment of section,

(5) of subsec. (c) had read as follows: gee § 1702(e) of ' Fiscal Ye ar 2003 Budget Support

"(5) The opinion of the ANC in which the estab- Emergency Act of 2002 (D.C. Act 14^53, July 23,

lishment is located has been given great weight as 2002, 49 DCR 8026).

specified in Chapter 4; and". For temporary (90 day) amendment of section,

D.C. Law 17-361, in subsec. (c)(4), substituted see § 2(b) of Southeast Federal Center/Yards

"after January 1, 2000" for "during the preceding Non-Discriminatory Grocery Store Emergency Act

12 months in which an application is made". f 2010 (D.C. Act 18-674, December 28, 2010, 58

D.C. Law 19-23, in subsec. (c)(3), substituted DCR 130).

"or, if located within the Southeast Federal Cen- Legislative History of Laws

ter, in the SEFC/C-R zone;" for a semicolon; and, ^ T , , 1fm , fu * s oc mi

. ' , N/ _. , , ., , ' « . , , ' . „ ' For Law 14-190, see notes following § 25-101.

in subsec. (c)(5), substituted weight; and ' for

"weight." For Law 15-187, see notes following § 25-101.

Temporary Amendments of Section For Law 17-361, see notes following § 25-113.

Section 2(b) of D.C. Law 18-346, in subsec. For history of Law 19-23, see notes under

(c)(3), substituted "or, if located within the South- § 25-101.

Subchapter II. Qualification of Establishment.

§ 25-311. Genera! provisions — qualification of establishment.

(a) Unless expressly stated otherwise in this chapter, the applicant shall bear the burden of
proving to the satisfaction of the Board that the establishment for which the license is sought
is appropriate for the locality, section, or portion of the District where it is to be located;
provided, that if proper notice has been given under subchapter II of Chapter 4, and no
objection to the appropriateness of the establishment is filed with the Board, the establish-
ment shall be presumed to be appropriate for the locality, section, or portion of the District
where it is located.

(b) Before evaluating the appropriateness of the establishment for which the license is
sought, the Board shall ensure that the applicant has complied fully with the notification
requirements set forth in § 25-422.

(c) No license, except a solicitor's license, shall be issued to an applicant unless the
applicant has a valid certificate of occupancy for the premises in which the establishment is
located and has all other licenses and permits required by law or regulation for its business.

ALCOHOLIC BEVERAGES REGULATION § 25-313

(d) If a temporary license is sought for an outdoor event or a private residential home used
for non-commercial purposes, the applicant shall not be required to provide a valid certificate
of occupancy.

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law
15-187, § 101(j), 51 DCR 6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187, in subsec. (c), deleted "or a y or Law 15-187, see notes following § 25-101.

temporary license" following "solicitor's license";
and added subsec. (d).

§ 25-313. Appropriateness standard.

(a) To qualify for issuance, renewal of a license, transfer of a license to a new location, or
an application for the approval of a substantial change in operation as determined by the
Board under § 25-404, an applicant shall demonstrate to the satisfaction of the Board that
the establishment is appropriate for the locality, section, or portion of the District where it is
to be located.

(b) In determining the appropriateness of an establishment, the Board shall consider all
relevant evidence of record, including:

(1) The effect of the establishment on real property values;

(2) The effect of the establishment on peace, order, and quiet, including the noise and
litter provisions set forth in §§ 25-725 and 25-726;

(3) The effect of the establishment upon residential parking needs and vehicular and
pedestrian safety; and

(4) In the case of a license renewal, the provisions of this subsection and § 25-315.

(c)(1) The requirements of this section shall not apply to applicants for a solicitor's license
or a temporary license.

(2) Applicants for a caterer's license shall apply according to the procedures under
Chapter 20 of the District of Columbia Municipal Regulations.

(d) No license shall be issued for an outlet, property, establishment, or business which sells
motor vehicle gasoline or which holds a Motor Vehicle Sales, 'Service, 'and Repair endorse-
ment under § 47-285 1.03(c) (9) or an Environmental Materials endorsement under
§ 47-2851. 03(c)(4) to its master business license.

(Jan. 24, 1934, 48 Stat. 327. ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat, 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90^50, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law
14-190, § 1702(f), 49 DCR 6968; Sept. 30, 2004, D.C. Law 15-187, § 201(a), 51 DCR 6525.)

Historical and Statutory Notes

Effect of Amendments D.C. Law 15-187 designated the existing text of

D.C. Law 14-190, in subsec. (a), substituted ", subsec. (c) as par. (1); and added par. (2) of

transfer of a license to a new location," for ", new subsec. (c).
owner license renewal/'.

§ 25-313 ALCOHOLIC BEVERAGES REGULATION

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) amendment of section, ;p or L aw 14-190, see notes following § 25-101.

see § 1702(f) of Fiscal Year 2003 Budget Support

Emergency Act of 2002 (D.C. Act 14-153, July 23, For Law 15 " 187 ' see notes Allowing § 25-101.

2002, 49 DCR 8026).

Notes of Decisions

Construction and application 1.5 District of Columbia Alcoholic Beverage Control

Bel, 2009, 979 A2d 52. Intoxicating Liquors <$=> 45

6. Renewals generally

1.5. Construction and application Doctrines of res judicata and collateral estoppel

Nature and identity of the parties, nature of did not bar alcoholic beverage control board from

their rights, and nature of impact of the change in concluding, on petitioner's liquor license renewal,

law upon those rights weighed in favor of finding that petitioner's restaurant adversely affected

that referendum petitioners were unlikely to suffer P eace A ordei \ ^ ^ °J neighborhood, despite

manifest injustice from application of Omnibus Al- fact f that P ast boards had concluded that restau-

■, ,. r > A i 4. a +. . omi i,- i rant was appropriate for neighborhood; prior adiu-

cohohc Beverage Amendment Act of 2004, which dications ^ £ tQ mo § iflcation ^ reexami _

eliminated referendum process as a means of chal- ^^ and heforQ renewing license after tw0 „ year

.lengmg liquor license applications, even though peiiod of Kcensurej board had to make new fmd _

their petition was already circulated and pending mgs? sep arate and apart form any prior findings,

before the Alcoholic Beverage Control Board; stat- regarding restaurant's appropriateness for neigh-

ute governing referendum process did not create borhood. Gallothom, Inc. v. District of Columbia

any unconditional or vested rights for its partici- Alcoholic Beverage Control Bd., 2003, 820 A.2d

pants, and Act left petitioners able to voice their 530. Administrative Law And Procedure <&* 501;

objections through protest process. Holzsager v. Intoxicating Liquors ©== 102

§ 25-314. Additional considerations for new license application or transfer of

license to a new location.

(a) In determining the appropriateness of an establishment for initial issuance of a license
or a transfer of a license to a new location, the Board shall also consider the following:

(1) The proximity of the establishment to schools, recreation centers, day care centers,
public libraries, or other similar facilities;

(2) The effect of the establishment on the operation and clientele of schools, recreation
centers, day care centers, public libraries, or other similar facilities; and

(3) Whether school-age children using facilities in proximity to the establishment will be
unduly attracted to the establishment while present at, or going to or from, the school,
recreation center, day care center, public library, or similar facility at issue.

(4) Whether issuance of the license would create or contribute to an overconcentration of
licensed establishments which is likely to affect adversely the locality, section, or portion in
which the establishment is located.

(b)(1) No license shall be issued for any establishment within 400 feet of a public, private,
or parochial primary, elementary, or high school; college or university; or recreation area
operated by the District of Columbia Department of Parks and Recreation, except as
provided in paragraphs (2) through (5) of this subsection.

(2) The 400-foot restriction shall not apply to a restaurant, hotel, club, caterer's, or
temporary license.

(3) The 400-foot restriction shall not apply if there exists within 400 feet a currently-
functioning establishment holding a license of the same class at the time that the new
application is submitted.

(4) The 400-foot restriction shall not apply if:

(A) The applicant applies for an off-premises retailer's license, Class B;

(B) The primary business and purpose of the establishment is the sale of a full range
of fresh, canned, and frozen food items, and the sale of alcoholic beverages is incidental to
the primary purpose;

(C) The sale of alcoholic beverages constitutes no more than 15% of the total volume of
gross receipts on an annual basis;

(D) The establishment is located in a C-l, C-2, C-3, C-4, or C-5 zone or, if located
within the Southeast Federal Center, in the SEFC/C-R zone;

ALCOHOLIC BEVERAGES REGULATION

§ 25-314

(E) The establishment is a full service grocery store which is newly constructed with a
certificate of occupancy issued after January 1, 2000, or is an existing store which has
undergone renovations in excess of $500,000 (i) after January 1, 2000 and prior to [March
8, 2006], or (ii) during the preceding 12 months in which an application is made;

(F) The opinion of the ANC in which the establishment is located has been given great
weight as specified in Chapter 4 [of this title]; and

(G) The applicant does not hold a manufacturer's or wholesaler's license.

(5) The 400-foot restriction shall not apply where the main entrance to the college,
university, or recreation area, or the nearest property line of the school is actually on or
occupies ground zoned commercial or industrial according to the official atlases of the
Zoning Commission of the District of Columbia.

(c) In the case of applications for nightclub or tavern licenses, the Board shall consider
whether the proximity of the establishment to a residence district, as identified in the zoning
regulations of the District and shown in the official atlases of the Zoning Commission for the
District, would generate a substantial adverse impact on the residents of the District.

(Jan. 24, 1934, 48 Stat, 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, ■§§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617: Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987. D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7. § 2,
34 DCR 2640; Oct, 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept, 30 2004, D.C. Law
15-187, § 201(b), 51 DCR 6525; Mar. 8, 2006, D.C. Law 16-53, § 2, 53 DCR 3; Mar. 14, 2007, D.C. Law
16-271, § 2, 54 DCR 854; Oct, 20, 2011, D.C. Law 19-23, § 2(c), 58 DCR 6509.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 15-187 rewrote par. (2) of subsec. (b)
which had read as follows:

"(2) The 400-foot restriction shall not apply to
hotel licenses, club licenses, or temporary licens-
es."

D.C. Law 16-53 added subsec. (b)(4).

D.C. Law 16-271, in subsec. (b)(1), substituted
"District of Columbia Department of Parks and
Recreation, except as provided in paragraphs (2)
through (5) of this subsection" for "D.C. Depart-
ment of Recreation"; rewrote subsec. (b)(2); and
added subsec. (b)(5). Prior to amendment, subsec.
(b)(2) read as follows:

"(2) The 400-foot restriction shall not apply to
hotel licenses, club licenses, caterer's licenses, or
temporary licenses."

D.C. Law 19-23, in subsec. (b)(4)(D), substituted
"or, if located within the Southeast P'ederal Cen-
ter, in the SEFC/C-R zone;" for a semicolon.
Temporary Amendments of Section

Section 2 of D.C. Law 16-297, in subsec. (b), in
par. (1), substituted "District of Columbia Depart-
ment of Parks and Recreation; except, that:'' for
"D.C. Department of Recreation", and amended
par. (2) and added par. (5) to read as follows:

"(2) The 400-foot restriction shall not apply to a
restaurant, hotel, club, caterer's, or temporary li-
cense."

"(5) The 400-foot restriction shall not apply
where the main entrance to the college, university,
or recreation area, or the nearest property line of
the school is actually on or occupies ground zoned

commercial or industrial according to the official
atlases of the Zoning Commission for the District
of Columbia."

Section 4(b) of D.C. Law 16-297 provides that
the act shall expire after 225 days of its having
taken effect.

Section 2(c) of D.C. Law 18-346, in subsec.
(b)(4)(D), substituted "or, if located within the
Southeast Federal Center, in the SEFC/C-R
zone;" for a semicolon at the end.

Section 4(b) of D.C. Law 18-346 provides that
the act shall expire after 225 days of its having
taken effect.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2 of Commercial Exception Clarification
Emergency Act of 2006 (D.C. Act 16-525, Decem-
ber 4, 2006, 53 DCR 9820).

For temporary (90 day) amendment of section,
see § 2(c) of Southeast Federal Center/Yards Non-
Discriminatorv Grocery Store Emergency Act of
2010 (D.C. Act 18-674, December 28, 2010, 58
DCR 130).
Legislative History of Laws

For Law 15-187, see notes following § 25-101.

Law 16-53, the "Full Service Grocery Store
Alcohol License Exception Act of 2005", was intro-
duced in Council and assigned Bill No. 16-160
which was referred to the Committee on Consumer
and Regulatory Affairs. The Bill was adopted on
first and second readings on November 1, 2005,
and December 6, 2005, respectively. Signed by
the Mayor on December 22, 2005, it was assigned
Act No. 16-215 and transmitted to both Houses of

§ 25-314

ALCOHOLIC BEVERAGES REGULATION

Congress for its review. D.C. Law 16-53 became
effective on March 8, 2006.

Law 16-271, the "Commercial Exception Clarifi-
cation Amendment Act of 2006", was introduced in
Council and assigned Bill No. 16-696, which was
referred to Committee on Consumer and Regulato-
ry Affairs. The Bill was adopted on first and
second readings on December 5, 2006, and Decem-

ber 19, 2006, respectively. Signed by the Mayor
on December 28, 2006, it was assigned Act No.
16-627 and transmitted to both Houses of Con-
gress for its review. D.C. Law 16-271 became
effective on March 14, 2007.

For history of Law 19-23, see notes under
§ 25-101.

Notes of Decisions

2. Transfers

Testimony from several neighborhood residents
that the area had enough licensed establishments
and another would result in an over-concentration
and evidence that the neighborhood was already
struggling with loitering, public drinking, and
trash problems attributable, at least in part, to
other nearby establishments with retail licenses to
sell alcoholic beverages supported denial of appli-
cation to transfer Retailer's Class B license to sell
beer and light wine. Tiger Wyk Ltd., Inc. v.
District of Columbia Alcoholic Beverage Control
Bd., 2003, 825 A.2d 303. Intoxicating Liquors <^
103(2)

Alcoholic Beverage Control Board's approval of
application to transfer Retailer's Class B license to
sell beer and light wine did not prevent it from
reaching a different conclusion on the same facts
on reconsideration. Tiger Wyk Ltd., Inc. v. Dis-
trict of Columbia Alcoholic Beverage Control Bd.,
2003, 825 A.2d 303. Intoxicating Liquors <£=>
103(4)

The Alcoholic Beverage Control Board ruling on
application to transfer Retailer's Class B license to
sell beer and light wine could lawfully determine
that licensing another store within 600 feet of
three other establishments would result in a harm-
ful over-concentration, even though the Board

found as a fact that the other three licensed retail
establishments were more than 400 feet from the
store. Tiger Wyk Ltd., Inc. v. District of Colum-
bia Alcoholic Beverage Control Bd., 2003, 825 A.2d
303. Intoxicating Liquors <^ 103(2)

The Alcoholic Beverage Control Board had the
statutory authority, when evaluating an application
to transfer Retailer's Class B license, to consider
whatever surrounding area would be necessary to
decide whether granting another license was ap-
propriate; whether the block on which it based
finding of over-concentration was something small,
large, or in between, the Board's statutory authori-
ty allowed it to establish whatever perimeter it
deemed necessary when considering whether the
grant of another license in the neighborhood would
result in a harmful over-concentration. Tiger Wyk
Ltd., Inc. v. District of Columbia Alcoholic Bever-
age Control Bd., 2003, 825 A.2d 303. Intoxicating
Liquors <3^ 103(2)

Licensee applying for transfer of Retailer's
Class B license to sell beer and light wane had the
burden of showing that another licensed establish-
ment would be appropriate. Tiger Wyk Ltd., Inc.
v. Disti'ict of Columbia Alcoholic Beverage Control
Bd., 2003, 825 A.2d 303. Intoxicating Liquors <^
103(4)

Subchapter III. Denial of License.

§ 25-331. Quotas— off -premises retail licenses.

(a) The number of off-premises retailer's licenses, class A, shall be no more than 250.

(b) The number of off-premises retailer's licenses, class B, shall be no more than 300.

(d) The quotas set forth in subsection (b) of this section shall not prohibit the issuance of a
license for an off-premises retailer's license, Class B, for the sale of alcoholic beverages in an
establishment if:

(1) The primary business and purpose is the sale of a full range of fresh, canned, and
frozen food items, and the sale of alcoholic beverages is incidental to the primary purpose;

(2) The sale of alcoholic beverages constitutes no more than 15% of the total volume of
gross receipts on an annual basis;

(3) The establishment is located in a C-l, C-2, C-3, C-4, or C-5 zone or, if located within
the Southeast Federal Center, in the SEFC/C-R zone;

(4) The establishment is a full service grocery store which is newly constructed with a
certificate of occupancy issued after January 1, 2000, or is an existing store which has
undergone renovations in excess of $500,000 in the calendar year in which an application is
made; and

ALCOHOLIC BEVERAGES REGULATION

§ 25-332

(5) The opinion of the ANC, if any, has been given great weight.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(k), 51 DCR
6525; Oct. 20, 2011, D.C. Law 19-23, § 2(d), 58 DCR 6509.)

Historical and

Effect of Amendments

D.C. Law 15-187 rewrote par. (5) of subsec. (d)
which had read as follows:

"(5) The opinion of the ANC in which the estab-
lishment is located has been given great weight as
specified in Chapter 4."

D.C. Law 19-23, in subsec. (d)(3), substituted
"or, if located within the Southeast Federal Cen-
ter, in the SEFC/C-R zone;" for a semicolon.
Temporary Amendments of Section

Section 2(d) of D.C. Law 18-346, in subsec.
(d)(3), substituted "or, if located within the South-
east Federal Center, in the SEFC/C-R zone;" for
a semicolon at the end.

Statutory Notes

Section 4(b) of D.C. Law 1.8-346 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2(d) of Southeast Federal Center/Yards
Non-Discriminatory Grocery Store Emergency Act
of 2010 (D.C. Act '18-674, December 28, 2010, 58
DCR 130).
Legislative History of Laws

For Law 15-187, see notes following § 25-101.

For history of Law 19-23, see notes under
§ 25-101.

§ 25-332. Moratorium on class B licenses.

(a) No new off -premises retailer's license, class B, shall be issued.

(b) The moratorium shall have a prospective effect.

(c) This moratorium shall not apply to an applicant for an off-premises retailer's license,
class B, for the sale of alcoholic beverages in an establishment if:

(1) The primary business and purpose is the sale of a full range of fresh, canned, and
frozen food items, and the sale of alcoholic beverages is incidental to the primary purpose;

(2) The sale of alcoholic beverages constitutes no more than 15% of the total volume of
gross receipts on an annual basis;

(3) The establishment is located in a C-l, C-2, C-3, C-4, or C-5 zone or, if located within
the Southeast Federal Center, in the SEFC/C-R zone;

(4) The establishment is a full service grocery store which is newly constructed with a
certificate of occupancy issued after January 1, 2000, or is an existing store which has
undergone renovations in excess of $500,000 during the preceding 12 months in which an
application is made; and

(5) The opinion of the ANC, if any, has been given great weight.

(d) An exception to the moratorium shall be granted for 4 new class B licenses on
Connecticut Avenue, N.W., between N Street and Florida Avenue, N.W., after October 22,
1999; provided, that no licensee shall devote more than 3,000 square feet to the sale of
alcoholic beverages.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law 14-190, § 1702(g), 49 DCR
6968; Sept. 30, 2004, D.C. Law 15-187, § 101(1), 51 DCR 6525; Oct. 20, 2011, D.C. Law 19-23, § 2(e), 58
DCR 6509.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 14-190, in subsec. (c)(4), substituted
"during the preceding 12 months" for "in the cal-
endar year".

D.C. Law 15-187 rewrote par. (5) of subsec. (c)
which had read as follows:

"(5) The opinion of the ANC in which the estab-
lishment is located has been given great weight as
specified in Chapter 4."

D.C. Law 19-23, in subsec. (c)(3), substituted
"or, if located within the Southeast Federal Cen-
ter, in the SEFC/C-R zone;" for a semicolon.

Temporary Amendments of Section

Section 2(e) of D.C. Law 18-346, in subsec.
(c)(3), substituted "or, if located within the South-
east Federal Center, in the SEFC/C-R zone;" for
a semicolon at the end.

Section 4(b) of D.C. Law 18-346 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 1702(g) of Fiscal Year 2003 Budget Support

§ 25-332 ALCOHOLIC BEVERAGES REGULATION

Emergency Act of 2002 (D.C. Act 14-453,. July 23, Legislative History of Laws

2002, 49 DCR 8026). For Law i 4 _ 19 o, see notes following § 25-101.

For temporary (90 day) amendment of section, „ T 1r 1(1 „ , ,, „ . c nr i/vl

see § 2(e) of Southeast Federal Center/Yards tor Law 15-187, see notes following § 25-101.

Non-Discriminatorv Grocery Store Emergency Act For history of Law 19-23, see notes under

of 2010 (D.C. Act 18-674, December 28, 2010, 58 § 95-101
DCR 130).

§ 25-333. Limitation on the distance between off-premises retailer's licenses.

(a) No new off- premises retailers license, class A, shall be issued for an establishment
which is located within 400 feet from another establishment operating under an off-premises
retailer's license, class A.

(b) No new off-premises retailers license, class B, shall be issued for an establishment
which is located within 400 feet from another establishment operating under an off -premises
retailer's license, class B.

(c) This section shall not prohibit the issuance of a license for an off-premises retailer's
license, Class B, for the sale of alcoholic beverages in an establishment if:

(1) The primary business and purpose is the sale of a full range of fresh, canned, and
frozen food items, and the sale of alcoholic beverages is incidental to the primary purpose;

(2) The sale of alcoholic beverages constitutes no more than 15% of the total volume of
gross receipts on an annual basis;

(3) The establishment is located in a C-l, C-2, C-3, C-4, or C-5 zone or, if located within
the Southeast Federal Center, in the SEFC/C-R zone;

(5) The opinion of the ANC, if any, has been given great weight.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(m), 51 DCR
6525; Oct. 20, 2011, D.C. Law 19-23, § 2(f), 58 DCR 6509.)

Historical and Statutory Notes

Effect of Amendments Section 4(b) of D.C. Law 18-346 provides that

D.C. Law 15-187 rewrote par. (5) of subsec. (c) the act shall expire after 225 days of its having

which had read as follows: taken effect.

"(5) The opinion of the ANC in which the estab- Emergency Act Amendments

lishment is located has been given great weight as For tempo (90 day) amendment of section,

specified in Chapter 4. see § 2(f) of Southeast Federal Center/Yarda Non _

D.C. Law 19-23, in subsec. (c)(3), substituted Discriminatory Grocery Store Emergency Act of

"or, if located within the Southeast Federal Cen- 2 010 (D.C. Act 18-674, December 28, 2010, 58

ter, in the SEFC/C-R zone;" tor a semicolon. DCR 130)

Temporary Amendments of Section T . , ,. TT . , - T

q 4.- om e ^n r 1Q o^ ■ i / w->- Legislative History of Laws
Section 2(f) of D.C. Law 18-346, m subsec. (c)(3), _, T

substituted "or, if located within the Southeast For Law 15 ~ 187 ' see notes foll °wmg § 25-101.

Federal Center, in the SEFC/C-R zone;" for a For history of Law 19-23, see notes under

semicolon at the end. § 25-101.

§ 25-334. Denial— Board-certified referendum. [Repealed]

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187. § 101(n), 51 DCR

6525.)

Historical and Statutory Notes
Legislative History of Laws
For Law 15-187, see notes following § 25-101.

ALCOHOLIC BEVERAGES REGULATION § 25-336

§ 25-335. Denial— public health and safety restrictions.

Notes of Decisions

In general 1 Past compliance with the Alcohol Beverage Con-
trol (AEC) laws is one of several appropriateness
qualifications an applicant must demonstrate to the

j , satisfaction of Alcohol Beverage Control Board.

I. in general Dupont Circle Citizens Ass'n v. District of Colum-

Certificates of occupancy duly— issued by the bia Alcoholic Beverage Control Bd., 2001, 766 A.2d

zoning division for an area comprised of two com- 59, Intoxicating- Liquors <^> 57.1

bined lots at the time applicant sought retailer's 0nce the Alcohol Beverage Control Board is

license for the sale of alcohol brought applicant m satisfied that an ap pii can t has satisfied the statuto-

compliance with statutory requirement that an ap- "appropriateness" qualifications, the Court of

plicant not be in violation of any other law or rule Appeals > review of that decision is deferential.

intended to protect public safety. Dupont Circle Dupont circle Citizens Ass'n v. District of Colum-

Citizens Ass'n v. District of Columbia Alcoholic bia Alcoholic Beverage Control Bd., 2001, 766 A.2d

Beverage Control Bd., 2001, 766 A.2d 59. Intoxi- 59 intoxicating Liquors <3=> 75(7)

eating Liquors &=> 57.1 Whether an agency tribunal such as the Alcohol

Board adequately considered applicant's record Beverage Control Board commits the disqualifica-

of compliance with the Alcohol Beverage Control tion decision entirely to the individual member, or

(ABC) laws, including lack of citations, in review- asserts the authority to itself disqualify a member,

ing its application for retailer's license to allow it to is a matter over which the court has almost no

serve alcohol. Dupont Circle Citizens Ass'n v. review authority. Dupont Circle Citizens Ass'n v.

District of Columbia Alcoholic Beverage Control District of Columbia Alcoholic Beverage Control

Bd., 2001, 766 A.2d 59. Intoxicating Liquors <3=> Bd., 2001, 766 A.2d 59. Intoxicating Liquors <s^

57.1 75(7)

§ 25-336. Retail license prohibited in residential-use district

(a) No retailer's license shall be issued for, or transferred to, a business operated in a
residential-use district as defined in the zoning regulations and shown in the official atlases of
the Zoning Commission for the District, except for a restaurant or tavern operated in a hotel
or apartment house, if the entrance to the restaurant or tavern is entirely inside the hotel or
apartment house and no sign or display is visible from the outside of the building.

(b) A nightclub license may be issued on the premises of a hotel that was legally located in
a residential-use district and was operating a nightclub on the licensed premises on Septem-
ber 30, 1986.

(c) Subsection (a) of this section shall not apply if, at the time the application for a new
license is submitted to the Board, a license of the same type and class is operating an
establishment within 400 feet of the applicant.

(d) The provisions of this section shall not apply to:

(1) A restaurant which has received a valid certificate of occupancy as of January 1, 2000
for a restaurant operation in a residential-use district; or

(2) A club which is operated under a license issued by the Board as of January 1, 2000
for operation in a residential-use district.

(e)(1) For the purposes of this subsection, the term "ANC 3/4G" means the single member
district area partly in Ward 3 and partly in Ward 4, established under § 1-309.03.

(2) Notwithstanding the restriction in subsection (a) of this section, a full service grocery
store in a residential-use district in ANC 3/4G with a certificate of occupancy issued prior to
[March 21, 2009], may apply for a retailer Class B license.

(3) The Mayor, pursuant to [subchapter I of Chapter 5 of Title 2], may issue rules to
implement the provisions of this subsection. The proposed rules shall be submitted to the
Council for a 30-day period of review, excluding Saturdays, Sundays, legal holidays, and
days of Council recess. If the Council does not approve or disapprove the proposed rules,
in whole or in part, by resolution, within this 30-day review period, the proposed rules shall
be deemed approved.

(Jan. 24, 1934, 48 Stat. 328, ch. 4, § 15; June 16, 1934, 48 Stat. 974, ch. 552; May 22, 1958, 72 Stat. 132,
Pub. L. 85-423, § 1; Mar. 7, 1987, D.C. Law 6-217, § 10, 34 DCR 907; May 24, 1994, D.C. Law 10-122,
§ 2(g), 41 DCR 1658; Apr. 12, 1997, D.C. Law 11-258, § 2(b), 44 DCR 1421; Mar. 24, 1998, D.C. Law
12-81, § 15, 45 DCR 745; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 21, 2009, D.C. Law
17-324, § 2(b), 56 DCR 239.)

§ 25-336

ALCOHOLIC BEVERAGES REGULATION

Historical and

Effect of Amendments

D.C. Law 17-324 added subsec. (e).
Temporary Amendments of Section

Section 2 of D.C. Law 17-32 amended subsec. (c)
by striking "type and".

Section 4(b) of D.C. Law 17-32 provides that the
act shall expire after 225 days of its having taken
effect.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2 of Retail Class Exemption Clarification
Emergency Act of 2007 (D.C. Act 17-67, July 9,
2007, 54 DCR 6822).

For temporary (90 day) amendment of section,
see § 2 of Retail Class Exemption Clarification

Statutory Notes

Congressional Review Emergency Act of 2007

(D.C. Act 17-144, October 17, 2007, 54 DCR

10747).

Legislative History of Laws

Law 17-324, the "Targeted Ward 4 Single Sales
Moratorium and Neighborhood Grocery Retailer-
Act of 2008", was introduced in Council and as-
signed Bill No. 17-941 which was referred to the
Committee on Public Works and the Environment.
The Bill was adopted on first and second readings
on November 18, 2008, and December 2, 2008,
respectively. Signed by the Mayor on December
22, 2008, it was assigned Act No. 17-629 and
transmitted to both Houses of Congress for its
review. D.C. Law 17-324 became effective on
March 21, 2009.

Notes of Decisions

2. Eligibility requirements

§ 25-340. Special restrictions for Ward 4.

No class A or B license shall be issued in or transferred into Ward 4; provided, that this
section shall not prohibit the transfer of a class A or B license within Ward 4. For the
purposes of this section, "Ward 4" means the area defined as Ward 4 in § 1-1041.03 on
[September 30, 2004]. This section shall not apply to any application for a new or transferred
license pending on [September 30, 2004].
(Sept. 30, 2004, D.C. Law 15-187, § 101(o), 51 DCR 6525.)

Historical and Statutory Notes

Legislative History of Laws reading on May 18, 2004 (Enrolled version of Bill

For Law 15-187, see notes following § 25-101. 15-516), referred to this section, is September 30,

References in Text 2004.

The effective date of the Omnibus Alcoholic Bev-
erage Amendment Act of 2004, passed on 2nd

Notes of Decisions

Pending applications 1

1. Pending applications

Grocery store's application for liquor license was
pending as of effective date of statute banning

issuance of new liquor licenses to establishments
located in ward and, thus, was exempt from ban,
where board had not granted or denied store's
license application, but instead had taken matter
under advisement. Holzsager v. District of Co-

ALCOHOLIC BEVERAGES REGULATION § 25-341

lumbia Alcoholic Beverage Control Bd., 2009, 979
A.2d 52. Intoxicating Liquors <£=> 45

§ 25-340.01. Special restrictions for Ward 4.

(a) For the purposes of this section, the term:

(1) "ANC 4C07" means the single member district area in Ward 4, established under
§ 1-309.03.

(2) "Ward 4" means the area defined as Ward 4 in § 1-1041.03 on September 30, 2004.

(b) Except as provided in subsections (c) and (d) of this section, no class A or B license
shall be issued in or. transferred into Ward 4; provided, that this section shall not prohibit the
transfer of a class A or B license within Ward 4.

(d) An exception to the moratorium imposed by subsection ■ (b) of this section on the
application of a Class B license shall be granted for a full service grocery store or
substantially renovated full service grocery store located within the boundaries of ANC 4C07,
with a certificate of occupancy issued after [March 21, 2009]; provided, that no licensee shall
devote more than 3,000 square feet to the sale of alcoholic beverages.

(e) The Mayor, pursuant to [subchapter I of Chapter 5 of Title 2], may issue rules to
implement the provisions of this section. The proposed rules shall be submitted to the
Council for a 30-day period of review, excluding Saturdays, Sundays, legal holidays, and days
of Council recess. If the Council does not approve or disapprove the proposed rules, in whole
or in part, by resolution, within this 30-day review period, the proposed rules shall be deemed
approved.

(Mar. 21, 2009, D.C. Law 17-324, § 2(c), 56 DCR 239.)

Historical and Statutory Notes

Temporary Addition of Section new or transferred license pending on September

Section 2 of D.C. Law 17-288 added a section to 30 > 2004 -"

read as follows: Section 5(b) of D.C. Law 17-288 provides that

«c i r n,mni* n • i i. • A - * 1T r i , the act shall expire after 225 days of its having

§25-340.01. Special restrictions tor Ward 4. taken effect.

"No class A or B license shall be issued in or Emergency Act Amendments

transferred into Ward 4; provided, that this sec- For temporary (90 day) addition, see § 2(a) of

tion shall not prohibit the transfer of a class A or Targeted Ward 4 Single Sales Moratorium Emer-

B license within Ward 4. For the purposes of this gency Act of 2008 (D.C. Act 17-509, September 25,

section, the term 'Ward 4' means the area defined 2008, 55 DCR 10878).

as Ward 4 in § 1-1041.03 on September 30, 2004. Legislative History of Laws

This section shall not apply to any application for a For Law 17-324, see notes following § 25-336.

§ 25-341. Targeted Ward 4 Moratorium Zone.

§ 25-341 ALCOHOLIC BEVERAGES- REGULATION

Spring Road, N.W., to Rock Creek Church Road, N.W.; thence in an easterly direction along
Rock Creek Church Road, N.W., to 7th Street, N.W., thence in a northerly direction along 7th
Street, N.W., to Randolph Street, N.W., thence in an easterly direction along Randolph
Street, N.W., to Rock Creek Church Road, N.W.; thence in a northeasterly direction along
Rock Creek Church Road, N.W., to Varnum Street, N.W.; thence in a westerly direction
along Varnum Street, N.W., to Grant Circle, N.W.; thence in a westerly direction along the
southern circumference of Grant Circle, N.W., to Varnum Street, N.W.; thence in a westerly
direction along Varnum Street, N.W., to 8th Street, N.W.; thence in a northerly direction
along 8th Street, N.W. , to Ingraham Street, N.W.;' thence in an easterly direction along
Ingraham Street, N.W., to 2nd Street, N.W.; thence in a southerly direction along 2nd Street,
N.W., to Farragut Street, N.W.; thence in a southeasterly direction along Farragut Street,
N.W., to 1st Street, N.W.; thence in a northeasterly direction along 1st Street, N.W., to
Gallatin Street, N.W.; thence in an easterly direction along Gallatin Street, N.W., to North
Capitol Street; thence in a northerly direction along North Capitol Street to Riggs Road,
N.E.; thence in an easterly direction along Riggs Road, N.E,, to South Dakota Avenue, N.E.;
thence in a southeasterly direction along South Dakota Avenue, N.E. , to Kennedy Street,
N.E.; thence in a northeasterly direction along Kennedy Street, N.E., to Madison Street,
N.E.; thence in a northwesterly direction along Madison Street, N.E. , to 6th Street, N.E.;
thence in a northeasterly direction along 6th Street, N.E., to Nicholson Street, N.E. ; thence
in a northwesterly direction along Nicholson Street, N.E., to 6th Street, N.E.; thence in a
northerly direction along 6th Street, N.E., to Eastern Avenue, N.E. ; thence in a northwest-
erly direction along Eastern Avenue, N.E., to New Hampshire Avenue, N.E. ; thence in a
southwesterly direction along New Hampshire Avenue, N.E. to Blair Road, N.E.; thence in a
northwesterly direction along Blair Road, N.E., to North Capitol Street; thence in a
northwesterly direction along Blair Road, N.W., to Aspen Street, N.W.;- thence in an easterly
direction along Aspen Street, N.W., to Willow Street, N.W.; thence in a northeasterly
direction along Willow Street, N.W., to Eastern Avenue, N.W.; thence in a northwesterly
direction along Eastern Avenue, N.W., to the point of beginning at the intersection of 13th
Street, N.W., and Eastern Avenue, N.W.; provided, that the Targeted Ward 4 Moratorium
Zone shall not include the area bounded by the line starting at the intersection of 8th Street,
N.W. , and Dahlia Street, N.W.; thence in a southerly direction along 8th Street, N.W., to
Aspen Street, N.W.; thence easterly along Aspen Street, N.W., to Piney Branch Road, N.W.;
thence southwesterly along Piney Branch Road, N.W., to 8th Street, N.W.; thence in a
southerly direction along 8th Street, N.W., to Madison Street, N.W.; thence in an easterly
direction along Madison Street, N.W., to 3rd Street, N.W.; thence in a northerly direction
along 3rd Street, N.W., to Whittier Street, N.W.; thence in a westerly direction along
Whittier Street, N.W., to 5th Street, N.W.; thence in a northerly direction along 5th Street,
N.W., to Dahlia Street, N.W.; thence in a westerly direction along Dahlia Street, N.W., to the
point of beginning at the intersection of 13th Street, N.W., and Dahlia Street, N.W.

(b) Within the Targeted Ward 4 Moratorium Zone, a licensee under an off-premises
retailer's license, class A or B, shall not divide a manufacturer's package of more than one
container of beer, malt liquor, or ale, to sell an individual container of the package if the
capacity of the individual container is 70 ounces or less.

(c) Within the Targeted Ward 4 Moratorium Zone, a licensee under an off-premises
retailer's license, class A or B, shall not sell, give, offer, expose for sale, or deliver an
individual container of beer, malt liquor, or ale with a capacity of 70 ounces or less.

(d) [Repealed].

(Sept. 30, 2004, D.C. Law 15-187, § 101(o), 51 DCR 6525; Aug. 15, 2008, D.C. Law 17-211, § 2(c), 55 DCR
6984.)

Historical and Statutory Notes

Effect of Amendments the expiration of this section, the Council Commit-

D.C. Law 17-211 repealed subsec. (d) which had tee having jurisdiction over the Alcoholic Beverage

read as follows: Control Board shall hold a public hearing on the

"(d) This section shall expire 4 years after [Sep- present need and appropriateness of the Targeted

tember 30, 2004]. No later than 60 clays before Ward 4 Moratorium Zone."

ALCOHOLIC BEVERAGES REGULATION § 25-341.01

Emergency Act Amendments For Law 17-211, see notes following § 25-342.

For temporary (90 day) additions, see § 2(b) to References in Text
(d) of Mt Pleasant Targeted Ward 2, and Ward 6 The effectiye date of the Qmnibus Mcoho][c Bey _

Single Sales Moratonum Emer^cy ^ of 2^ Amendment Act of 2004, passed on 2nd

(D.C. Act 1,-471, July 28, 2008, 55 DCR 9004). rea | ng on May lg? 2m (Enrolled version of Bill

Legislative History of Laws 15-516), referred to subsec. (d), is September 30,

For Law 15-187, see notes fullmving § 25-101. 2004.

§ 25-341.01. Targeted Ward 4 Moratorium Zone.

(a) For the purposes of this section, the term "Targeted Ward 4 Moratorium Zone" means
the area bounded by the line starting at 13th Street, N.W., and Eastern Avenue, N.W.;
thence in a southerly direction along 13th Street, N.W., to Fern Street, N.W.; thence in an
easterly direction along Fern Street, N.W., to Georgia Avenue, N.W.; thence in a southerly
direction along Georgia Avenue, N.W., to Aspen Street, N.W.; thence in a westerly direction
along Aspen Street, N.W., to 13th Street, N.W.; thence in a southerly direction along 13th
Street, N.W., to Piney Branch Road, N.W.;' thence in a southerly direction along Piney
Branch Road, N.W., to 13th Street, N.W.; thence in a southerly direction along 13th Street,
N.W., to Colorado Avenue, N.W.; thence in a southwesterly direction along Colorado Avenue,
N.W., to Madison Street, N.W.; thence in a westerly direction along Madison Street, N.W., to
16th Street, N.W.; thence in a southerly direction along 16th Street, N.W., to Spring Road,
N.W.; thence in an easterly direction along Spring Road, N.W. to 13th Street, N.W.; thence
in a northerly direction along 13th Street, N.W., to Randolph Street, N.W.; thence in an
easterly direction along Randolph Street, N.W. to 10th Street, N.W*; thence in a southerly
direction along 10th Street, N.W., to Spring Road, N.W.; thence in an easterly direction along
Spring Road, N.W., to Rock Creek Church Road, N.W.; thence in an easterly direction along
Rock Creek Church Road, N.W., to 7th Street, N.W.; thence in a northerly direction along
7th Street, N.W., to Randolph Street, N.W.; thence in an easterly direction along Randolph
Street, N.W., to Rock Creek Church Road, N.W.; thence in a northeasterly direction along
Rock Creek Church Road, N.W., to Varnum Street, N.W.; thence in a westerly direction
along Varnum Street, N.W., to Grant Circle, N.W. ; thence in a westerly direction along the
southern circumference of Grant Circle, N.W., to Varnum Street, N.W.; thence in a westerly
direction along Varnum Street, N.W.-, to 8th Street, N.W.; thence in a northerly direction
along 8th Street, N.W., to Ingraham Street, N.W.; thence in an easterly direction along
Ingraham Street, N.W., to 2nd Street, N.W.; thence in a southerly direction along 2nd Street,
N.W., to Farragut Street, N.W.; thence in a southeasterly direction along Farragut Street,
N.W., to 1st Street, N.W.; thence in a northeasterly direction along 1st Street, N.W., to
Gallatin Street, N.W.; thence in an easterly direction along Gallatin Street, N.W., to North
Capitol Street; thence in a northerly direction along North Capitol Street to Riggs Road,
N.E.; thence in an easterly direction along Riggs Road, N.E., to South Dakota Avenue, N.E.;
thence in a southeasterly direction along South Dakota Avenue, N.E., to Kennedy Street,
N.E.; thence in a northeasterly direction along Kennedy Street, N.E., to Madison Street,
N.E.; thence in a northwesterly direction along Madison Street, N.E., to 6th Street, N.E.;
thence in a northeasterly direction along 6th Street, N.E., to Nicholson Street, N.E.; thence
in a northwesterly direction along Nicholson Street, N.E., to 6th Street, N.E.; thence in a
northerly direction along 6th Street, N.E., to Eastern Avenue, N.E.; thence in a northwest-
erly direction along Eastern Avenue, N.E., to New Hampshire Avenue, N.E.; thence in a
southwesterly direction along New Hampshire Avenue, N.E. to Blair Road, N.E.; thence in a
northwesterly direction along Blair Road, N.E., to North Capitol Street; thence in a
northwesterly direction along Blair Road, N.W., to Aspen Street, N.W.; thence in an easterly
direction along Aspen Street, N.W., to Willow Street, N.W.; thence in a northeasterly
direction along Willow Street, N.W., to Eastern Avenue, N.W.; thence in a northwesterly
direction along Eastern Avenue, N.W., to the point of beginning at the intersection of 13th
Street, N.W., and Eastern Avenue, N.W.; provided, that the Targeted Ward 4 Moratorium
Zone shall not include the area bounded by the line starting at the intersection of 8th Street,
N.W. , and Dahlia Street, N.W.; thence in a southerly direction along 8th Street, N.W., to
Aspen Street, N.W.; thence easterly along Aspen Street, N.W., to Piney Branch Road, N.W.;
thence southwesterly along Piney Branch Road, N.W., to 8th Street, N.W.; thence in a
southerly direction along 8th Street, N.W., to Madison Street, N.W.; thence in an easterly
direction along Madison Street, N.W., to 3rd Street, N.W.; thence in a northerly direction

§ 25-341.01

ALCOHOLIC BEVERAGES REGULATION

along 3rd Street, N.W., to Whittier Street, N.W.; thence in a westerly direction along
Whittier Street, N.W., to 5th Street, N.W.; thence in a northerly direction along 5th Street,
N.W., to Dahlia Street, N.W.; thence in a westerly direction along Dahlia Street, N.W., to the
point of beginning at the intersection of 13th Street, N.W., and Dahlia Street, N.W.

(b) Within the Targeted Ward 4 Moratorium Zone, a licensee under an off-premises
retailer's license, class A or B, shall not:

(1) Divide a manufacturer's package of more than one container of beer, malt liquor, or
ale, to sell an individual container of the package if the capacity of the individual container
is 70 ounces or less; or

(2) Sell, give, offer, expose for sale, or deliver an individual container of beer, malt liquor,
or ale with a capacity of 70 ounces or less.

(c) The Mayor, pursuant to [subchapter I of Chapter 5 of Title 2], may issue rules to
implement the provisions of this section. The proposed rules shall be submitted to the
Council for a 30-day period of review, excluding Saturdays, Sundays, legal holidays, and days
of Council recess. If the Council does not approve or disapprove the proposed rules, in whole
or in part, by resolution, within this 30-day review period, the proposed rules shall be deemed
approved.

(Mar. 21, 2009, D.C. Law 17-324, § 2(c), 56 DCR 239.)

Historical and Statutory Notes

Temporary Addition of Section

Section 2 of D.C. Law 17-288 added a section to
read as follows:

"§ 25-341.01. Targeted Ward 4 Moratorium
Zone.

"(a) For the purposes of this section, the term
'Targeted Ward 4 Moratorium Zone' means the
area bounded by the line starting at 13th Street,
N.W., and Eastern Avenue, N.W.; thence in a
southerly direction along 13th Street, N.W., to
Fern Street, N.W.; thence in an easterly direction
along Fern Street, N.W., to Georgia Avenue, N.W.;
thence in a southerly direction along Georgia Ave-
nue, N.W., to Aspen Street, N.W.; thence in a
westerly direction along Aspen Street, N.W., to
13th Street, N.W.; thence in a southerly direction
along 13th Street, N.W., to Piney Branch Road,
N.W.; thence in a southerly direction along Piney
Branch Road, N.W., to 13th Street, N.W.; thence
in a southerly direction along 13th Street, N.W., to
Colorado Avenue, N.W.; thence in a southwesterly
direction along Colorado Avenue, N.W., to Madi-
son Street, N.W.; thence in a westerly direction
along Madison Street, N.W., to 16th Street, N.W.;
thence in a southerly direction along 16th Street,
N.W., to Spring Road, N.W.; thence in an easterly
direction along Spring Road, N.W. to 13th Street,
N.W.; thence in a northerly direction along 13th
Street, N.W., to Randolph Street, N.W.; thence in
an easterly direction along Randolph Street, N.W.
to 10th Street, N.W.; thence in a southerly di-
rection along 10th Street, N.W., to Spring Road,
N.W.; thence in an easterly direction along Spring
Road, N.W., to Rock Creek Church Road, N.W.;
thence in an easterly direction along Rock Creek
Church Road, N.W./to 7th Street, N.W., thence in
a northerly direction along 7th Street, N.W., to
Randolph Street, N.W., thence in an easterly di-
rection along Randolph Street, N.W., to Rock
Creek Church Road, N.W.; thence in a northeast-
erly direction along Rock Creek Church Road,

N.W., to Varnum Street, N.W.; thence in a wester-
ly direction along Varnum Street, N.W., to Grant
Circle, N.W.; thence in a westerly direction along
the southern circumference of Grant Circle, N.W.,
to Varnum Street, N.W.; thence in a westerly
direction along Varnum Street, N.W., to 8th
Street, N.W.; thence in a northerly direction along
8th Street, N.W., to Ingraham Street, N.W.;
thence in an easterly direction along Ingraham
Street, N.W., to 2nd Street, N.W.; thence in a
southerly direction along 2nd Street, N.W., to Far-
ragut Street, N.W.; thence in a southeasterly di-
rection along Farragut Street, N.W., to 1st Street,
N.W.; thence in a northeasterly direction along 1st
Street, N.W., to Gallatin Street, N.W.; thence in
an easterly direction along Gallatin Street, N.W.,
to North Capitol Street; thence in a northerly
direction along North Capitol Street to Riggs
Road, N.E.; thence in an easterly direction along
Riggs Road, N.E., to South Dakota Avenue, N.E.;
thence in a southeasterly direction along South
Dakota Avenue, N.E., to Kennedy Street, N.E.;
thence in a northeasterly direction along Kennedy
Street, N.E., to Madison Street, N.E.; thence in a
northwesterly direction along Madison Street,
N.E., to 6th Street, N.E.; thence in a northeaster-
ly direction along 6th Street, N.E., to Nicholson
Street, N.E.; thence in a northwesterly direction
along Nicholson Street, N.E., to 6th Street, N.E.;
thence in a northerly direction along 6th Street,
N.E., to Eastern Avenue, N.E.; thence in a north-
westerly direction along Eastern Avenue, N.E., to
New Hampshire Avenue, N.E.; thence in a south-
westerly direction along New Hampshire Avenue,
N.E. to Blair Road, N.E.; thence in a northwest-
erly direction along Blair Road, N.E., to North
Capitol Street; thence in a northwesterly direction
along Blair Road, N.W., to Aspen Street, N.W.;
thence in an easterly direction along Aspen Street,
N.W., to Willow Street, N.W.; thence in a north-
easterly direction along Willow Street, N.W., to
Eastern Avenue, N.W.; thence in a northwesterly

ALCOHOLIC BEVERAGES REGULATION

§ 25-343

direction along Eastern Avenue, N.W., to the point
of beginning at the intersection of 13th Street,
N.W., and Eastern Avenue, N.W.; provided, that
the Targeted Ward 4 Moratorium Zone shall not
include the area bounded by the line starting at
the intersection of 8th Street, N.W. , and Dahlia
Street, N.W.; thence in a southerly direction along
8th Street, N.W., to Aspen Street, N.W.; thence
easterly along Aspen Street, N.W., to Piney
Branch Road, N.W.; thence southwesterly along
Piney Branch Road, N.W., to 8th Street, N.W.;
thence in a southerly direction along 8th Street,
N.W., to Madison Street, N.W.; thence in an east-
erly direction along Madison Street, N.W., to 3rd
Street, N.W.; thence in a northerly direction along
3rd Street, N.W., to Whittier Street, N.W.; thence
in a westerly direction along Whittier Street, N.W.,
to 5th Street, N.W.; thence in a northerly di-
rection along 5th Street, N.W., to Dahlia Street,
N.W.; thence in a westerly direction along Dahlia
Street, N.W., to the point of beginning at the
intersection of 13th Street, N.W., and Dahlia
Street, N.W.

"(b) Within the Targeted Ward 4 Moratorium
Zone, a licensee under an off-premises retailer's
license, class A or B, shall not:

"(1) Divide a manufacturer's package of more
than one container of beer, malt liquor, or ale, to
sell an individual container of the package if the
capacity of the individual container is 70 ounces or
less; or

"(2) Sell, give, offer, expose for sale, or deliver
an individual container of beer, malt liquor, or ale
with a capacity of 70 ounces or less.".

Section 5(b) of D.C. Law 17-288 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) addition, see § 2(a) of
Targeted Ward 4 Single Sales Moratorium Emer-
gency Act of 2008 (D.C. Act 17-509, September 25,
2008, 55 DCR 10878).

Legislative History of Laws

For Law 17-324, see notes following § 25-336.

§ 25-342. Special restrictions for off-premises retailer's license in Ward 7.

(a) For the purposes of this section, the term "Ward 7" means the area defined as Ward
VII in § l-lG41.03(a) on [August 15, 2008].

(b) A licensee under an off-premises retailer's license in Ward 7, class A or B, shall not
divide a manufacturer's package of more than one container of beer, malt liquor, or ale, to sell
an individual container of the package if the capacity of the individual container is 70 ounces
or less.

(c) A licensee under an off-premises retailer's license in Ward 7, class A or B, shall not sell,
give, offer, expose for sale, or deliver an individual container of beer, malt liquor, or ale with a
capacity of 70 ounces or less.

(Aug. 15, 2008, D.C. Law 17-211, § 2(b), 55 DCR 6984.)

Historical and Statutory Notes

Legislative History of Laws

Law 17-211, the "Wards 4, 7, and 8 Anti-Sale
Containers of Alcoholic Beverages Act of 2008",
was introduced in Council and assigned Bill
No. 17-532 which was referred to Public Works and

and second readings on May 6, 2008, and June 3,
2008, respectively. Signed by the Mayor on June
18, 2008, it was assigned Act No. 17^07 and
transmitted to both Houses of Congress for its
review. D.C. Law 17-211 became effective on

the Environment. The Bill was adopted on first August 15, 2008.

§ 25-343. Special restrictions for off-premises retailer's license in Ward 8.

(a) For the purposes of this section, the term "Ward 8" means the area defined as Ward
VIII in § l-1041.03(a) on [August 15, 2008].

(b) A licensee under an off-premises retailer's license in Ward 8, class A or B, shall not
divide a manufacturer's package of more than one container of beer, malt liquor, or ale, to sell
an individual container of the package if the capacity of the individual container is 70 ounces
or less.

(c) A licensee under an off-premises retailer's license in Ward 8, class A or B, shall not sell,
give, offer, expose for sale, or deliver an individual container of beer, malt liquor, or ale with a
capacity of 70 ounces or less.

(Aug. 15, 2008, D.C. Law 17-211,

2(b), 55 DCR 6984.)
43

§ 25-343 ALCOHOLIC BEVERAGES REGULATION

Historical and Statutory Notes
Emergency Act Amendments Review Emergency Act of 2008 (D.C. Act 17-564,

For temporary (90 day) additions, see § 2(b) of October 27, 2008, 55 DCR 12024).
Mt. Pleasant, Targeted Ward 2, and Targeted Legislative History of Laws
Ward 6 Single Sales Moratorium Congressional For Law 17-211, see notes following § 25-342.

§ 25-344, Special restrictions for off-premises retailer's license in Mt. Pleas-
ant.

(a) For the purposes of this section, the term "Mt. Pleasant" means the area defined as
ANC-1D, delimited by Piney Branch Parkway to the north, 16th Street to the east, Harvard
Street to the south, and Adams Mill and Klingle Roads to the west, on [December 24, 2008].

(b) A licensee under an off-premises retailer's license in Mt. Pleasant, class A or B, shall
not:

(2) Sell, give, offer, expose for sale, or deliver an individual container of beer, malt liquor,
or ale with a capacity of 70 ounces or less.

(Dec. 24, 2008, D.C. Law 17-287, § 2(b), 55 DCR 11993.)

Historical and Statutory Notes

Legislative History of Laws "Sec. 4. Rules.

Law 17-287, the "Consolidated Mt. Pleasant, « The Mayor, pursuant to Title I of the District
Ward 2, and Ward 6, Single Sales Moratorium Act of Columb [ a Administrative Procedure Act, ap-
of 2008", was introduced in Council and assigned d Q ^ 21 1%g (g2 gtat im D c 0ffi _
Bill No. 17-846 I which was r eferred to the Conumt- t { e
tee on Public Works and the Environment. The . .. * . . ,y ' ,/ , ™
Bill was adopted on first and second readings on implement the provisions of this act The pro-
July 15, 2008, and October 7, 2008. respectively. P ose d rules shall be submitted to the Council for a
Signed by the Mayor on October 27, 2008, it was 30-day period of review, excluding Saturdays, Sun-
assigned Act No. 17-553 and transmitted to both days, legal holidays, and days of Council recess. If
Houses of Congress for its review. D.C. Law the Council does not approve or disapprove the
17-287 became effective on December 24, 2008. proposed rules, in whole or in part, by resolution.
Miscellaneous Notes within this 30-day review period, the proposed

Section 4 of D.C. Law 17-287 provides: rules shall be deemed approved."

§ 25-345. Ward 2 restrictions for off-premises retailer's license.

(a) For the purposes of this section, the term "Ward 2" means the area defined as Ward II
in § 1-1041.03 on [December 24, 2008].

(b) A licensee under an off-premises retailer's license, class A or B, located in Ward 2, shall
not:

(2) Sell, give, offer, expose for sale, or deliver an individual container of beer, malt liquor,
or ale with a capacity of 70 ounces or less, as well as spirits (liquor) sold in half-pints or
smaller volumes.

(c)(1) An existing licensee may apply to the Alcoholic Beverage Control Board for an
exception to the restrictions in subsection (b) of this section. The Board shall notify the
Advisory Neighborhood Commission in which the licensee is located when a licensee applies
for an exception and provide a copy of the application. The copy of the application shall be
provided at the address of the ANC's office of record. The Board shall make its determina-
tion on the licensee application within 60 calendar days of receipt of the application.

(2) In making a determination on the licensee application under this subsection, the
Board shall consider the following factors:

ALCOHOLIC BEVERAGES REGULATION § 25-346

(A) The input, if any, of the ANC in which the licensee is located, as evidenced by a
vote of the ANC, which shall be given great weight;

(B) Whether the exception will negatively impact the enforceability and effectiveness
of the ban;

(C) The absence or presence of any primary or secondary tier violations within the 12
months immediately preceding the date of application, including sales to minors, use of
premises for unlawful purposes, or sale to persons without a valid identification;

(D) Evidence of licensee participation in the community, such as attendance at ANC
and Police Service Area community meetings; and

(E) Clear and convincing evidence that there have been no significant adverse
community impacts, such as loitering, littering, or other anti-social behavior in the
vicinity of the licensee establishment.

(3) A new licensee under an off-premises retailer's license, class A or B, may not apply
for an exception under this subsection within the first 12 months of having obtained a
license under this title.

(d) The restrictions in subsection (b) of this section shall not apply to a licensee located in a
federal building, or to a licensee that is a full-service grocery store, as described in this title.
(Dec. 24, 2008, D.C. Law 17-287, § 2(c), 55 DCR 11993.)

Historical and Statutory Notes

Legislative History of Laws

For Law 17-287, see notes following § 25-344.

§ 25-346. Ward 6 restrictions for off -premises retailer's license.

(a) For the purposes of this section, the term "Ward 6" means the area defined as Ward VI
in § 1-1041.03 on [December 24, 2008].

(b) A licensee under an off-premises retailer's license, class A or B, located in Ward 6 shall
not:

(2) In making a determination on the licensee application under this subsection, the
Board shall consider the following factors:

(A) The input, if any, of the ANC in which the licensee is located, as evidenced by a
vote of the ANC, which shall be given great weight;

(B) Whether the exception will negatively impact the enforceability and effectiveness
of the ban;

(D) Evidence of licensee participation in the community, such as attendance at ANC
and Police Service Area community meetings; and

§ 25-346 ALCOHOLIC BEVERAGES REGULATION

Historical and Statutory Notes

Legislative History of Laws

For Law 17-287, see notes following § 25-344.

Subchapter IV. Board-created Moratoria.

§ 25-351. Board-created moratoria.

(a) If the Board reasonably determines that it is in the public interest to do so based on the
appropriateness standard set forth in subchapter II of this chapter, the Board may, by rule:

(1) Limit the number of licenses of any class to be issued;

(2) Declare a moratorium on the issuance of licenses of any class, or the issuance of
amended licenses that constitute a substantial change, in any locality, section, or portion of
the District; or

(3) Declare a moratorium in any locality, section, or portion of the District to limit the
sale of products by licensees under an off-premises retailer license, class A and B.

(b) Any group with standing under § 25-601 may request the Board to issue regulations
establishing the limit or declaring the moratorium. A moratorium issued by the Board under
subsection (a)(1) or (a)(2) of this section shall have a prospective effect and shall not apply to
existing licenses.

(c) A moratorium on the issuance of an amended license that constitutes a substantial
change, in accordance with § 25-762, shall only be allowed in those geographical areas for
which a limit or moratorium on the number of licenses in any class is in effect and shall apply
to any application filed after May 3, 2001, for an amended license that would constitute a
substantial change.

(d) No licensee or agent of any licensee shall be entitled to make a request under
subsection (b) of this section.

(e) A moratorium shall be effective for 5 years from the date of final rulemaking, or for a
lesser period as determined by the Board.

(f) If the Board acts on a moratorium request, a moratorium request for the same area, or
an area covering substantially the same area, shall not be considered for 2 years from the
date of the Board's action.

(g) The requirements of this section shall not apply to solicitor's licenses, manager's
licenses, caterer's licenses, or to temporary licenses.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 201(c), 51 DCR
6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187 added subsec. (g). For Law 15-187, see notes following § 25-101.

§ 25-352. Procedures to request a moratorium.

(a) The moratorium request shall be made to the Board in writing, stating:

(1) The name and address of the individual, group, or business entity seeking the
moratorium;

(2) The area of the District to be covered by the moratorium;

ALCOHOLIC BEVERAGES REGULATION § 25-352

(3) The class or classes of licenses to be covered by the moratorium; and

(4) A detailed statement of the reasons that the moratorium is appropriate under at least

2 of the appropriateness standards set forth in subchapter II of this chapter.

(b) For the purposes of subsection (a)(2) of this section, the individual, group, or business
entity seeking the moratorium shall identify one licensed establishment. The area to be
covered by the moratorium shall be measured from the property lines of that establishment.
The entire area to be covered under a moratorium shall be either a locality, section, or
portion.

(c) For the purposes of subsection (a)(3) of this section, a moratorium may be sought for a
single class of license or for any combination of the classes of licenses.

(d) No moratorium request to limit the number of licenses' to be issued, the number of
licenses issued for any single class, or the issuance of amended licenses for any single class
that constitute a substantial change shall be considered by the Board unless all the
requirements of subsection (a) of this section have been met and the following conditions are
satisfied:

(1) If the requested moratorium area is a locality, there shall exist in the area at least 3
licensed establishments of the same class or 6 licensed establishments of any class or
combination of classes;

(2) If the requested moratorium area is a section, there shall exist in the area at least 6
establishments of the same class or 12 establishments of any class or combination of
classes; or

(3) If the requested moratorium area is a portion, there shall exist in the area at least 9
establishments of the same class or 18 establishments of any class or combination of
classes.

(e) A moratorium request to limit the sale of products by licensees under an off -premises
retailer's license, class A and class B, shall not be considered by the Board unless all the
requirements of subsection (a) of this section have been met and the following conditions are
satisfied:

(1) If the requested moratorium area is a locality, there shall exist in the locality at least

3 class A, 3 class B, or any combination of 3 class A or class B licensed establishments;

(2) If the requested moratorium area is a section, there shall exist in the section at least
5 class A, 5 class B, or any combination of 5 class A or class B licensed establishments; or

(3) If the requested moratorium area is a portion, there shall exist in the portion at least
7 class A, 7 class B, or any combination of 7 class A or class B licensed establishments.

(f) The requirements of this section shall not apply to solicitor's licenses, manager's
licenses, caterer's licenses, or to temporary licenses.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law 14-190, § 1702(h), 49 DCR
6968; Sept. 30, 2004, D.C. Law 15-187, § 201(d), 51 DCR 6525.)

Historical and Statutory Notes

Effect of Amendments lishments of the same class or 12 establishments of

D.C. Law 14-190 rewrote subsec. (d), and added an y class or combination of classes; and"

subsec. (e). Subsec. (d) had read as follows: "(3) If the requested moratorium area is a por-

iUJ . AT A . , . „ ■ . t , tion, there shall exist in that area at least 9 estab-

(d) No moratorium request shall be considered lishments of the same c]ass or 18 establishments of

by the Board unless all of the requirements of a nv class or combination of classes."

subsection (a) of this section have been met and D c Law 15 _ lg7 added gubgec> (f)>

the following conditions are satisfied: „ . . .

Emergency Act Amendments

"(1) If the requested moratorium area is a local- For temporary (90 day) amendment of section,

ity, there shall exist in that area at least 3 licensed see § 1702(h) of Fiscal Year 2003 Budget Support

establishments of the same class or 6 licensed Emergency Act of 2002 (D.C. Act 14-453, July 23,

establishments of any class or combination of 2002, 49 DCR 8026).

classes;" Legislative History of Laws

"(2) If the requested moratorium area is a sec- For Law 14-190, see notes following § 25-101.

tion, there shall exist in that area at least 6 estab- For Law 15-187, see notes following § 25-101.

§ 25-353 ALCOHOLIC BEVERAGES REGULATION

§ 25-353. Notice requirements for moratorium proceedings.

If a moratorium request meets all of the requirements set forth in § 25-352, the Board
shall provide notice to the public according to the same procedures as required by § 25-421.

(Mav 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(p), 51 DCR

6525.)

Historical and Statutory Notes
Effect of Amendments applicant prescribed in § 25-422 shall be assumed

D.C. Law 15-187 substituted "§ 25-421" for by the Board".
"§§ 25-421 and 25-422; provided, that, for pur- Legislative History of Laws

poses of this section, the responsibilities of the For Law 15-187, see notes following § 25-101.

§ 25-354. Board review of moratorium request

(a) The Board shall hold a public hearing to review a proposed moratorium. The public
hearing shall be in the nature of a rulemaking hearing under § 2-505 and not in the nature of
a contested case under § 2-509.

(b) At the public hearing, any interested person may appear to give oral or written
testimony in support of, or in opposition to, the moratorium request.

(c) In addition to receiving testimony from the public, the Board shall request formal
comments from the following persons or agencies:

(1) The Councilmembers within whose wards the requested moratorium area is located;

(2) The ANCs within whose areas the requested moratorium area is located and any
other ANC abutting the proposed moratorium area;

(3) The Assistant City Administrator for Economic Development, or his or her designee;

(4) The Office of Planning, or its successor agency; and

(5) The District Commander of the Metropolitan Police Department in which the
requested moratorium zone is located.

(d) In deciding on a moratorium request, the Board shall consider the extent to which the
testimony and comments show r that the requested moratorium is appropriate under at least 2
of the appropriateness standards set forth in subchapter II of this chapter.

(e) The Board may grant the moratorium request in one or more of the following ways:

(1) In whole or in part;

(2) By enlarging or decreasing the moratorium area; or

(3) By limiting the moratorium to no more than one class of license.

(f) The Board may deny the moratorium request in its entirety.

(g) The decision of the Board shall be final and shall be issued in writing, including each
member's vote.

(Mav 3, 2001, D.C. Law 13-298, § 101. 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101 (q), 51 DCR

6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187, in par. (2) of subsec. (c), For Law 15-187, see notes following § 25-101.

substituted u is located and any other ANC abut-
ting the proposed moratorium area" for "is locat-
ed".

Subchapter VI. Moratorium on Establishments Which Permit Nude Dancing.

§ 25-371. Moratorium on establishments which permit nude dancing.

(a) Except as provided in subsection (b) of this section, no licensee under this title shall
permit nude dancers.

ALCOHOLIC BEVERAGES REGULATION § 25-374

(b) A licensee who regularly provided entertainment by nude dancers before December 15,
1993, may continue to do so at its establishment.

(Jan. 24, 1934, 48 Stat. 319, ch. 4, § 3; Aug. 27, 1935, 49 Stat. 897, ch. 756, § 1; Dec. 8, 1970, 84 Stat.
1393, Pub. L. 91-535, § 1; Apr. 18, 1978, D.C. Law 2-73, § 3, 24 DCR 7066; Sept. 29, 1982, D.C. Law
4-157, §§ 2, 15, 29 DCR 3617; Mar. 10, 1983, D.C. Law 4-204, § 2, 30 DCR 185; Aug. 2, 1983, D.C. Law
5-16, § 2, 30 DCR 3193; May 23, 1986, D.C. Law 6-119, § 2, 33 DCR 2447; Mar. 7, 1987, D.C. Law
6-217, § 2, 34 DCR 907; Aug. 17, 1991, D.C. Law 9-40, § 2(a), 38 DCR 4974; Oct. 3, 1992, D.C. Law
9-174, § 2(a), 39 DCR 5859; Sept. 11, 1993, D.C. Law 10-12, § 2(a), 40 DCR 4020; May 24, 1994, D.C.
Law 10-122,§ 2(a), 41 DCR 1658; Apr. 12, 1997, D.C. Law 11-258, § 2(a), 44 DCR 1421; Mar. 26, 1999,
D.C. Law 12-202, § 2(a), 45 DCR 8412; Mar. 26, 1999, D.C. Law 12-206, § 2(a), 45 DCR 8430; May 3,
2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 26, 2001, D.C. Law 14-42, § 6(c), 48 DCR 7612.)

Historical and Statutory Notes

Effect of Amendments Act of 2001 (D.C. Act 14-108, August 3, 2001, 48

D.C. Law 14-42, in subsec. (a), substituted DCR 7622).

"shall" for "may"; and validated the previously T ,. -, + . n tj- + : „+> T „ „

i j. T- i i.- ..I 4.- j ■ Legislative History ol JLaws

made technical corrections in the section designa- b

tion of § 25-371. For Law 14-42, see notes following § 25-120.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 6(c) of Technical Amendments Emergency

§ 25™374. Transfer of location of establishments which permit nude dancing.

(a) A license under § 25-371(b) may only be transferred to a location in the Central
Business District or, if the licensee is currently located in a CM or M-zoned district,
transferred within the same CM or M-zoned district, as identified in the zoning regulations of
the District of Columbia and shown in the official atlases of the Zoning Commission of the
District of Columbia; provided, that no license shall be transferred to any premises which is
located:

(1) Six hundred feet or less from another licensee operating under § 25-371 (b); and

(2) Six hundred feet from a building with a certificate of occupancy for residential use or
a lot or building with a permit from the Department of Consumer and Regulatory Affairs
for residential construction at the premises.

(b)(1) Notwithstanding the restrictions of subsection (a) and (a)(1) of this section, but
subject to the provisions in subsection (a)(2) of this section, if a licensee was located in a CM
or M-zoned district, in or within 2000 feet of the footprint of the Ballpark, as of January 1,
2006, or was located within the Skyland Development Project site as described in § 2-1219.
19(c)(1), as of January 1, 2007, then within one year of [October 18, 2007] a license may be
transferred to:

(A) A location in any CM or M-zoned district, if the licensee was located in a CM or
M-zoned district, respectively, as identified in the zoning regulations of the District of
Columbia and shown in the official atlases of the Zoning Commission of the District of
Columbia;

(B) A location in any CM-zoned district, if the licensee was located within the Skyland
Development Project site; or

(2) For the purposes of this subsection, the term "Ballpark" shall have the same meaning
as provided in § 47-2002.05(a)(l)(A).

(c)(1) No more than 2 licensees may be transferred to any one ward pursuant to subsection
(b) of this section.

(2) Licensees transferring to a C-4 zone shall not count against the ward limitations set
forth in paragraph (1) of this subsection.

(d) Notwithstanding any other provision, licensees relocating pursuant to subsection (b) of
this section shall not locate within 1,200 feet from each other.

(e) No portion of any establishment granted a license pursuant to subsection (b) of this
section shall be located within 600 feet of a church, school, library, playground, or the area
under the jurisdiction of the Commission of Fine Aits pursuant to §§ 6-611.01-6-611.02.

§ 25-374

ALCOHOLIC BEVERAGES REGULATION

(f) All licensees shall consult the Advisory Neighborhood Commission in the area where the
license is transferred pursuant to subsection (b) of this section regarding entering a voluntary
agreement with the community.

(g) Notwithstanding any other provision of this section, a license under subsection (b) of
this section shall not be transferred prior to November 1, 2007, or to a location that has been
rezoned by that date to a residential, C-l, or C-2 zoning district classification as identified in
the Zoning Regulations of the District of Columbia.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 18, 2007, D.C. Law 17-24, § 2, 54 DCR 8011.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 17-24 designated the existing text as
subsec. (a); and added subsecs. (b) to (g).
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2 of Moratorium on Establishments Which
Permit Nude Dancing Emergency Act of 2012
(D.C. Act 19-302, February 21, 2012, 59 DCR
1671).
Legislative History of Laws

Law 17-24, the "The One-Time Relocation of
Licensees Displaced by the Ballpark and Skyland

Development Project Act of 2007", was introduced
in Council and assigned Bill No. 17-109 which was
referred to the Committee on Public Works and
Environment. The Bill was adopted on first and
second readings on June 5, 2007, and July 10, 2007,
respectively. Signed by the Mayor on July 26,
2007, it was assigned Act No. 17-86 and transmit-
ted to both Houses of Congress for its review.
D.C. Law 17-24 became effective on October 18,
2007.

Chapter 4
Application and Review Processes.

Subchapter I. Application Requirements.

Section

25-402.

25-403.

25-410.
25-411.

New license application for manufactur-
er, wholesaler, or retailer.

License renewal application for manufac-
turer, wholesaler, or retailer.

Application for manager's license.

Application and responsibilities of pool
buying retail agent.

Subchapter II. Notice Of Application
Proceedings.

25-421. Notice by Board.

25-422. Notice by applicant. [Repealed]

Section

25-^423. Posted notice required after submission
of application and for the duration of
the protest period.

Subchapter III. Review Of
License Applications.

25-431. Review procedures — general provisions.
25-433. Decisions of the board; petition for re-
consideration.

Subchapter IV. Review And
Resolution Procedures.

25-441 . Hearings — continuances.

25-446. Voluntary agreements; approval process;

show cause hearing for violation.
25-447. Show cause hearing.

Subchapter I. Application Requirements.

§ 25-402. New license application for manufacturer, wholesaler, or retailer.

(a) The application of a person applying for a manufacturer's, wholesaler's, or retailer's
license shall include:

(1) In the case of an individual applicant, the trade name of the business, if applicable,
and the name and address of the individual; in the case of a partnership or limited liability
company applicant, the trade name of the business, if applicable, and the names and
addresses of each member of the partnership or limited liability company; and in the case
of a corporate applicant, the legal name, trade name, place of incorporation, principal place
of business, and the names and addresses of each of the corporation's principal officers,
directors, and shareholders holding, directly or beneficially, 10% or more of its common
stock;

ALCOHOLIC BEVERAGES REGULATION § 25-402

(2) The name and address of the owner of the establishment for which the license is
sought and the premises where it is located; provided, that this requirement shall not apply
to applicants for a solicitor's license;

(3) The class of license sought;

(4) The proximity of the establishment to the nearest public or private, elementary,
middle, charter, junior high, or high school, and the name of the school;

(5) The size and design of the establishment, which shall include both the number of
seats (occupants) and the number of patrons permitted to be standing, both inside and on
any sidewalk cafe or summer garden.

(6) A detailed description of the nature of the proposed operation, including the
following:

(A) The type of food to be offered, if any;

(B) The type of entertainment to be offered, if any;

(D) The hours during which the establishment plans to sell alcoholic beverages;

(E) If different from those stated in subparagraph (D) of this paragraph, the hours
during which the establishment plans to remain open for the sale of goods or services
other than alcoholic beverages and a description of the provisions planned for the storage
of the alcoholic beverages, as required under § 25-754, during hours when the sale of
alcoholic beverages is prohibited;

(7) An affidavit that complies with § 47-2863(b);

(8) Documents or other written statements or evidence establishing to the satisfaction of
the Board that the person applying for the license meets all of the qualifications set forth in
§ 25-301; and

(9) Written statements or evidence establishing to the satisfaction of the Board that the
applicant has complied with the requirements of § 25-423.

(b) The applicant for a restaurant or hotel license shall attest that it will receive at least
45% of its gross annual receipts from the sale of food during each year of the license period.

(d) The applicant for a nightclub license shall file a written security plan with the Board.

(e) The Board may require, in its sound discretion, the applicant for a restaurant, tavern,
or multipurpose facility license to file a written security plan with the Board.

(f) A written security plan shall include at least the following elements:

(1) A statement on the type of security training provided for, and completed by,
establishment personnel, including:

(A) Conflict resolution training;

(B) Procedures for handling violent incidents, other emergencies, and calling the
Metropolitan Police Department; and

(2) The establishment's procedures for permitting patrons to enter;

(3) How security personnel are stationed inside and in front of the establishment and the
number and location of cameras used by the establishment;

(4) Procedures in place to prevent patrons from becoming intoxicated and ensuring that
only persons 21 years or older are served alcohol; and

(5) How the establishment maintains an incident log.

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct, 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 2, 2007, D.C. Law
16-192, § 1012(b), 53 DCR 6899; July 18, 2008, D.C. Law 17-201, § 4(b), 55 DCR 6289; Mar. 25, 2009,
D.C. Law 17-353, § 242, 56 DCR 1117.)

§ 25-402 ALCOHOLIC BEVERAGES REGULATION

Historical and Statutory Notes

Effect of Amendments Emergency Act of 2006 (D.C. Act 16^77, August

D.C. Law 16-192, in subsec. (a)(1), substituted 8, 2006, 53 DCR 7068).

"shareholders holding, directly or beneficially 10% For t (90 d } ame ndment of section,

or more of its common stock for shareholders e

holding 25% or more of its common stock . ^ . \ -r, . ^ * ^ .- ™^>

t,. T 1r70ft1 , ■ , , VC v , Congressional Review Emergency Act of 2006

D.C. Law 17-201 rewote subsec. (a)(6); and (D . C . Act 16-499, October 23, 2006, 53 DCR 8845).

added subsecs. (d), (e), and (f). Prior to repeal,

subsec. (a)(6) read as follows: For temporary (90 day) amendment of section,

"(6) The size and design of the establishment for see § 1012(b) of Fiscal Year 2007 Budget Support

which the license is sought;" Congressional Review Emergency Act of 2007

D.C. Law 17-353, in subsec. (a), redesignated < D - C - Act 17 ~^ January 16, 2007, 54 DCR 1165).

former pars. (6) to (10) as pars. (5) to (9), respec- Legislative History of Laws

tively * For Law 16-192, see notes following § 25-301.

For Law 17-201, see notes following § 25-101.

see § 1012(b) of Fiscal Year 2007 Budget Support For Law 17-353, see notes following § 25-113.

Emergency Act Amendments

For temporary (90 day) amendment of section, For Law 17 - 201 ' seG notes following § 25-101.

§ 25-403. License renewal application for manufacturer, wholesaler, or retail-
er.

(a) An applicant for license renewal shall verify, by affidavit, the accuracy of its application,
including all documents and submissions constituting a part of the application for its initial
license or, if appropriate, at the time of a Board-approved substantial change in operation.

(b) In the case of an application for renewal of a restaurant or hotel license, the applicant
shall present evidence establishing that the sale of food accounted for at least 45% of gross
annual receipts from the operation of the restaurant or of the dining room of the hotel during
the current license period.

(c) The applicant shall submit documents or other written evidence establishing to the
satisfaction of the Board that the applicant has complied with the requirements of § 25-423.

(d) The Board shall establish application procedures for the renewal of a caterer's license
under § 25-21 1(b):

(e) In the case of an application for renewal of a nightclub license, the applicant shall
submit a written security plan.

(f) In the case of an application for renewal for a restaurant, tavern, or multipurpose
facility license, the Board may, in its sound discretion, require that the applicant submit a
written security plan.

(g) A written security plan shall include at least the following elements:

(1) A statement on the type of security training provided for, and completed by,
establishment personnel, including:

(A) Conflict resolution training;

(B) Procedures for handling violent incidents, other emergencies, and calling the
Metropolitan Police Department; and

(2) The establishment's procedures for permitting patrons to enter;

(3) How security personnel are stationed inside and in front of the establishment and the
number and location of cameras used by the establishment;

(4) Procedures in place to prevent patrons from becoming intoxicated and ensuring that
only persons 21 years or older are served alcohol; and

(5) How the establishment maintains an incident log.

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616 Pub L
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C Law 7-7, § 2
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; Mav 24, 1994, D.C. Law 10-122 '
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR*3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; July 18, 2008, D.C. Law
17-201, § 4(c), 55 DCR 6289.)

ALCOHOLIC BEVERAGES REGULATION § 25-411

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 17-201 added subsecs. (e), (f), and (g). For Law 17-201, see notes following § 25-101.

§ 25-410. Application for manager's license.
The application for a manager's license shall include:

(1) Certification that he or she has obtained read a copy of this title;

(2) Written statements or evidence establishing to the satisfaction of the Board that the
applicant meets all of the qualifications set forth in § 25-301; and

(3) A copy of the applicant's alcohol training and education certificate.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(r), 51 DCR
6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187, in pars. (1) and (2), made ]? or Law 15-187, see notes following § 25-101.

nonsubstantive changes; and added par. (3).

§ 25-411. Application and responsibilities of pool buying retail agent.

(a) The application for a pool buying group retail agent permit shall include:

(1) The name of the pool buying group;

(2) The appointed license retail agent for the pool buying group; and

(3) A statement that the agent will fully comply with Chapter 9 and other regulations
regarding recordkeeping.

(b) All taxes due on alcoholic beverages imported by an agent who has been issued an
importation license shall be paid as prescribed in Chapter 9.

(1) The date the pool order was placed and each date it was revised;

(2) The distributor who was given the order;

(3) The names and license numbers of each pool member participating in the pool order;

(4) The price, discounts, and net price of all alcoholic beverages ordered by each member
in the pool order; and

(5) The date when deliveries of pool orders are made to the pool buying agent's
premises, which is a permitted off-premises storage area.

(d) The pool buying agent shall place the order under the name of the pool buying group
and provide instructions for delivery as well as each licensed retailer's part of the pool order.

(e) Upon wTitten request, a pool buying agent shall make available for inspection all papers
and reports related to pool orders, purchases, and payments within 10 days to any ABRA
employee.

(f)(1) Individual members of a pool buying group shall place their orders and remit their
payment to the pool buying agent.

(2) Payments shall be made payable to the pool buying agent or the distributor.

(3) Distributors of alcoholic beverages may accept pool orders and payment only from
the designated pool buying agent of a pool buying group.

(Sept. 30, 2004, D.C. Law 15-187, § 401(h), 51 DCR 6525.)

Historical and Statutory Notes

Legislative History of Laws References in Text

For Law 15-187, see notes following § 25-101. "Chapter 9", referred to in par. (3) of snbsec. (a)

and in snbsec. (b), is Chapter 9 of this title.

§ 25-411 ALCOHOLIC BEVERAGES REGULATION

Miscellaneous Notes to the Council for a 45-day period of review,

Sections 402 and 403 of D.C. Law 15-187 pro- excluding Saturdays, Sundays legal holidays, and

T . , . days of Council recess, If the Council does not

M e ' approve or disapprove the rules and regulations, in

"Sec. 402. Rules and regulations. whole or in part, by resolution with the 45-day

"The Mayor shall promulgate proposed rules review period, the proposed rules and regulations

and regulations to administer this title within 180 sha11 be deemed approved.

days of its effective date. The proposed rules and "Sec. 403. Applicability.

regulations, as well as any subsequent rules and "Section 401 shall apply upon the effective date

regulations amending this title, shall be submitted of the regulations promulgated under section 402."

Subchapter II. Notice Of Application Proceedings.

§ 25-421. Notice by Board.

(a) Upon the receipt of an application for the issuance or renewal, for a substantial change
in operation as determined by the Board under 25-404, or for the transfer of a license to a
new location, of a retailer's license, the Board shall give notice of the application to the
following parties:

(1) The Council;

(2) Repealed.

(3) Repealed.

(4) Any ANC within 600 feet of where the establishment is or will be located.

(b) The notice shall contain the legal name and trade name of the applicant, the street
address of the establishment for which the license is sought, the class of license sought, and a
description of the nature of the operation the applicant has proposed or the proposed change
in operation. The description shall include the hours of sales or service of alcoholic beverages.

(c) The notice to the Board of Education shall state the proximity of the establishment to
the nearest public school of the District and the name of the nearest public school.

(d) The notice shall state that persons objecting to approval of the application are entitled
to be heard before the granting of the license, and shall inform the recipient of the final day
of the protest period and the date, time, and place of the administrative review in accordance
with subchapter III of this chapter.

(e) The Board shall give notice to the ANC by first-class mail, postmarked not more than 7
days after the date of submission, and addressed to the following persons:

(1) The ANC office, with a copy for each ANC member;

(2) The ANC chairperson, at his or her home address of record; and

(3) The ANC member in whose single-member district the establishment is or will be
located, at his or her home address of record.

(f) The Board shall publish the notices required under this section in the District of
Columbia Register.

(g) Within 180 days after May 3, 2001, the Board shall implement a procedure by which it
will provide additional notification, via electronic media, to the public and ANCs, of these
notification requirements, and the publication of proposed and adopted regulations.

(h) The requirements of this section shall not apply to applicants for a caterer's license.

ALCOHOLIC BEVERAGES REGULATION § 25-423

Historical and Statutory Notes

Effect of Amendments "(4) The ANC representing the area in which

D.C. Law 15-187, -in subsec. (a), repealed pars. the establishment is or will be located."

(2) and (3) and rewrote par. (4); and added subsec Legislative History of Laws

(h). Prior to amendment, pars. (2), (3), and (4) of to

subsec. (a) had read as follows: For Law 15-187, see notes following § 25-101.

"(2) The Board of Education;

"(3) The member of the Board of Education in
whose district the establishment is or will be locat-
ed; and

§ 25-422. Notice by applicant. [Repealed]

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; July 18, 2008, D.C. Law
17-201, § 4(d), 55 DCR 6289.)

Historical and Statutory Notes

Legislative History of Laws

For Law 17-201, see notes following § 25-101.

§ 25-423. Posted notice required after submission of application and for the
duration of the protest period.

(a) The applicant shall post 2 notices, furnished by ABRA, of the application in conspicuous
places on the outside of the establishment for the duration of the protest period.

(b) The notices shall state:

(1) The information required by § 25-421 (b);

(2) The final day of the protest period;

(3) The date, time, and place of the administrative review; and

(4) The telephone number and mailing address of ABRA.

(d) An applicant who fails to maintain the posted notices continuously during the protest
period shall be guilty of a violation of this chapter.

(e) If the Board determines that the notices posted at an applicant's establishment have not
remained visible to the public for a full 45 days, the Board shall require the reposting of the
notices and shall reschedule the administrative review for a date at least 45 days after the
originally scheduled review, unless the applicant has fully performed all other notice require-
ments and the Board determines that it is in the best interests, of the parties to proceed at an
earlier date.

(f) The requirements of this section shall not apply to applicants for a solicitor's license,
manager's license, caterer's license, or a temporary license.

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5. 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law
15-187, § 201(f), 51 DCR 6525.)

§ 25-423 ALCOHOLIC BEVERAGES REGULATION

Historical and Statutory Notes

Effect of Amendments Legislative History of Laws

D.C. Law 15-187 added subsec. (f). For Law 15-187, see notes following § 25-101.

Subchapter III. Review Of License Applications.

§ 25-431. Review procedures — general provisions.

Notes of Decisions

1. In general stituted majority of that quorum. Aziken v. Dis-
Three members of Alcoholic Beverage Control trict of Columbia Alcoholic Beverage Control Bd.,
Board constituted a quorum for purpose of revok- 2011, 29 A.3d 965. Intoxicating Liquors ©=> 108.9
ing alcoholic beverage license of operator of night-
club, and thus, Board's order revoking operator's 2. Hearings

license to serve alcoholic beverages, signed by only Alcohol Beverage Control Board had no reason
three members of Board, was valid; provision of to disqualify member who had been replaced as
statute specifically defined quorum as three mem- chair of the Board, but continued to hold position
bers of seven-member Board, order issued by on Board, from proceeding on application for re-
three members of Board showed on its face that it tailer's license. Dupont Circle Citizens Ass'n v.
was action of quorum, and even without vote of District of Columbia Alcoholic Beverage Control
member who was not present at all three hearings, Bd., 2001, 766 A.2d 59. Administrative Law And
two Board members who did attend hearings con- Procedure ©=> 314; Intoxicating Liquors <£=> 70

§ 25-433. Decisions of the board; petition for reconsideration.

(a) No application shall be approved until the Board has determined that the applicant has
complied with § 25-402(a)(8) through (10) (and § 25-402(b) if the applicant is a restaurant or
hotel) or, in the case of a renewal, has fulfilled the license requirements of this title. The
Board shall make findings of fact with respect to each requirement, including the appropriate-
ness standards set forth in §§ 25-313, 25-314, and 25-315, and the food sales requirements
for restaurants and hotels.

(b) For the purposes of this section, the record shall close when a hearing is concluded.
Parties shall have 30 days after the conclusion of the hearing to submit proposed findings of
fact and conclusions of law to the Board.

(c) Within 90 days after the close of the record, the Board shall issue its written decision
accompanied by findings of fact and conclusions of law. The Board shall publish and maintain
a compilation of its decisions and orders.

(d)(1) A petition for reconsideration, rehearing, reargument, or stay of a decision or order
of the Board may be filed by a party within 10 days after the date of receipt of the Board's
final order.

(2) The filing or the granting of a petition filed under paragraph (1) of this subsection
shall not stay the final order unless the stay is specifically ordered by the Board.

(3) A stay shall be granted only upon good cause, which shall consist of unusual or
exceptional circumstances.

(e) The Board may establish procedures under § 25-211(b) to consider an application
which is not protested during the protest period.

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law
14-190, § 1702(i), 49 DCR 6968.)

ALCOHOLIC BEVERAGES REGULATION § 25-446

Historical and Statutory Notes

Effect of Amendments Emergency Act of 2002 (D.C. Act 14-453, July 23,

D.C. Law 14-190, in subsec. (b), substituted "30" 2002, 49 DCR 8026).

_ ' Legislative History of Laws

Emergency Act Amendments . _ 1A1

T7 , /ftA i x -, , « , . For Law 14-190, see notes following § 25-101.

For temporary (90 day) amendment of section, ' &

see § 17020) of Fiscal Year 2003 Budget Support

Notes of Decisions

1. In general sell beer and light wine did not prevent it from

The Alcoholic Beverage Control Board, like any reaching a different conclusion on the same facts

court, has the power to reconsider any decision it on reconsideration. Tiger Wyk Ltd., Inc. v. Dis-

makes, unless there is some statute or regulation tr j ct f Columbia Alcoholic Beverage Control Bd,

that affirmatively forbids such action Tiger Wyk 2003/825 A.2d 303. Intoxicating Liquors «®=>

Ltd., Inc. v. District ot Columbia Alcoholic Bever- ino/^

age Control Bd., 2003, 825 A.2d 303. Intoxicating W6{V
Liquors <3= 71

3. Findings

Alcoholic Beverage Control Board's approval of
application to transfer Retailer's Class B license to

Subchapter. IV. Review And Resolution Procedures.

§ 25-441. Hearings — continuances.

(a) A hearing may be continued for good cause. A written motion for a continuance shall be
filed with the Board at least 6 days before the scheduled hearing date and served upon all
parties at least 6 calendar days before the hearing. To be granted, the motion shall, in the
opinion of the Board, set forth good and sufficient cause for continuance or demonstrate that
an extreme emergency exists,

(b) A continuance shall not waive the requirements of this chapter governing the time in
which to file objections , petitions, or other pleadings.

(c) The Board may, on motion of any party or on its own motion, continue a hearing to
permit an ANC to vote on a material issue in the hearing or upon a determination that the
interests of justice will be served by the granting of the continuance to any party.

(d) The Board may waive the provisions of this section if all parties agree to a continuance.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law 14-190, § 1702Q), 49 DCR
6968.)

Historical and Statutory Notes

Effect of Amendments Emergency Act Amendments

D.C. Law 14-190 rewrote subsec. (c) which had For temporary (90 day) amendment of section,

read as follows: see § 17020') of Fiscal Year 2003 Budget Support

"(c) The Board may, on motion of any party or Emergency Act of 2002 (D.C. Act 14-453, July 23,

,7i./ 9009 4Q "HPT? ^09fU

on its own motion, continue a hearing in order to ^ uu ^> ^ -l"^xv ou^u;.

permit an ANC to vote on a material issue in the Legislative History of Laws

hearing." For Law 14-190, see notes following § 25-101.

§ 25-446. Voluntary agreements; approval process; show cause hearing for
violation.

(a) The applicant and any protestant may, at any time, negotiate a settlement and enter
into a written voluntary agreement setting forth the terms of the settlement.

(b) The signatories to the agreement shall submit the agreement to the Board for approval.

(c) If it determines that the voluntary agreement complies with all applicable laws and
regulations and the applicant otherwise qualifies for licensure, the Board shall approve the
license application, conditioned upon the licensee's compliance with the terms of the voluntary

§ 25-446 ALCOHOLIC BEVERAGES REGULATION

agreement. The Board shall incorporate the text of the voluntary agreement in its order and
the voluntary agreement shall be enforceable by the Board.

(d)(1) Unless a shorter term is agreed upon by the parties, a voluntary agreement shall run
for the term of a license, including renewal periods, unless it is terminated or amended in
wiiting by the parties and the termination or amendment is approved by the Board,

(2) The Board may accept an application to amend or terminate a voluntary agreement
by fewer than all parties in the following circumstances:

(A) During the license's renewal period; and

(B) After 4 years from the date of the Board's decision initially approving the
voluntary agreement.

(3) Notice of an application to amend or terminate a voluntary agreement shall be given
both to the parties of the agreement and to the public at the time of the applicant's renewal
application according to the renewal procedures required under §§ 25-421 through 25-423.

(4) The Board may approve a request by fewer than all parties to amend or terminate a
voluntary agreement for good cause shown if it makes each of the following findings based
upon sworn evidence:

(A)(i) The applicant seeking the amendment has made a diligent effort to locate all
other parties to the voluntary agreement; or

(ii) If non-applicant parties are located, the applicant has made a good-faith attempt
to negotiate a mutually acceptable amendment to the voluntary agreement;

(B) The need for an amendment is either caused by circumstances beyond the control
of the applicant or is due to a change in the neighborhood where the applicant's
establishment is located; and

(C) The amendment or termination will not have an adverse impact on the neighbor-
hood where the establishment is located as determined under § 25-313 or § 25-314, if
applicable.

(5) To fulfill the good faith attempt criteria of paragraph (4)(A)(ii) of this subsection, a
sworn affidavit from the applicant shall be filed with the Board at the time that an
application to amend a voluntary agreement by fewer than all parties is filed stating that
either:

(A) A meeting occurred between the parties which did not result in agreement; or

(B) The non-applicant parties refused to meet with the applicant.

(e) The Board shall initiate a show cause hearing upon evidence that a licensee has violated
a voluntary agreement. Upon a determination that the licensee has violated the voluntary
agreement, the Board shall penalize the licensee according to the provisions set forth for
violations of a license in Chapter 8.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(t), 51 DCR
6525.)

Historical and Statutory Notes

Effect of Amendments it is terminated or amended in writing by the
D.C. Law 15-187 rewrote subsec. (d) which had parties and the termination or amendment is sp-
read as follows: proved by the Board."

"(d) A voluntary agreement shall run for the Legislative History of Laws
term of a license, including renewal periods, unless For Law 15-187, see notes following § 25-101.

§ 25-447. Show cause hearing.

(a) The Board shall receive, at any time during the license period, complaints from any
person, or an affected ANC, alleging a violation by a licensee of the terms of its license.
Complaints shall be in writing and set forth enough information to allow the Board or its staff
to investigate the matter.

(b) In addition to written complaints identifying the complainant, any person may make an
anonymous complaint in writing to the Board or orally to any ABRA investigator. Anonymous
complaints shall be investigated to the best of the Board's ability, but may result in no action
being taken if the anonymous complainant fails to provide the Board or the investigator with
adequate information.

ALCOHOLIC BEVERAGES REGULATION § 25-504

(c) Within 30 days of receiving evidence supporting a reasonable belief that any licensee or
permittee is in violation of the provision of this title or the regulations issued under it, the
Board shall order the licensee or permittee, by personal service or certified mail, to appear
before the Board not less than 30 days thereafter to show cause why the license or permit
should not be revoked or suspended, or the licensee or permittee penalized, as provided by
subchapter II of Chapter 8. The notice shall state the time and place set by the Board for the
hearing.

(d) The licensee or permittee (or in the case of an entity, all members, partners, or officers)
shall appear in person, may be represented by counsel, and shall be entitled to offer evidence
in his, her, or its defense.

(e) If the, licensee or permittee waives the hearing or fails to appear, the Board shall
proceed ex parie, unless the Board extends the time for the hearing for good and sufficient
cause.

(f) If the Board holds a show cause hearing on a complaint made under subsection (a) of
this section, the Board, in issuing its order, may place certain conditions on the license if it
determines that the inclusion of the conditions would be in the best interests of the locality,
section, or portion of the District in which the establishment is licensed. The Board, in placing
the conditions, shall state, in writing, the rationale for its decision.

(g) All written complaints as set forth under subsection (a) of this section, which identify
the complainant by name and address, shall be responded to by the Board or its staff within
90 days of receipt of the complaint, and shall advise the complainant of the action that the
Board or its staff has taken on the matter.

(h) The Board shall maintain records documenting complaints received and the action
taken in response to the complaint.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(u), 51 DCR
6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187, in subsec. (a), substituted "an For Law 15-187, see notes following § 25-101.

affected ANC" for "the ANC representing the area
in which the licensee exists".

Chapter 5
Annual Fees.

Section Section

25-502. Mayor may propose alteration in license 25-505, Fees for Arena C/X by Mayor.

fees. 25-511. Minimum fee for pool buying group retail

25-504. Minimum annual fees for on-premises re- importation permit.

tail licenses, class C and D.

§ 25-502. Mayor may propose alteration in license fees.

Historical and Statutory Notes

Delegation of Authority Related Amendments Act of 2001, see Mayor's

Delegation of Authority Pursuant to D.C. Law Order 2001-96, June 28, 2001 (48 DCR 6277).
13-298, the Title 25, D.C. Code Enactment and

§ 25-504. Minimum annual fees for on-premises retail licenses, class C and D.

The minimum annual fees for an on-premises retailer's licenses, class C and D, shall be as
set forth on the following schedule. Capacity shall be the posted level of occupancy approved
under the Construction Codes, as defined under § 6-1401 and as set forth in Title 12 of the
District of Columbia Municipal Regulations.

§ 25-504

ALCOHOLIC BEVERAGES REGULATION

Type

Capacity

Class C (beer,
wine, spirits)

Class D (beer &
wine)

Restaurant

99 or fewer.

$500

$300

100 to 199.

$1,000

$600

200 to 499.

$1,500

$900

500 oi' more.

$2,000

$1,200

Tavern

99 or fewer.

$800

$500

100 to 199.

$1,600

$1,000

200 or more.

$2,400

$1,500

Nightclub

99 or fewer.

$1,500

$1,000

100 to 199.

$2,000

$1,250

200 to 499.

$2,500

$1,500

500 to 999.

$3,500

$2,000

1,000 or more.

$4,500

$3,500

Hotel

99 or fewer guest rooms.

$2,000

$1,000

100 or more guest rooms.

$4,000

$2,000

Club

$1,500

$500

Multipurpose
facility

$1,500

$500

Marine vessel

Single vessel.

$1,500

$750

Marine vessel line

3 or fewer vessels and
dockside waiting areas.

$2,500

$1,000

Each additional vessel or
dockside waiting area.

$1,500

$500

Railroad dining or
club car

Single car.

$500

$250

Railroad company

All dining or club cars.

$1,500

$750

Caterer

More than $1,000,000 per
year gross annual receipts

$5,000

—

Caterer-

$1,000,000 or less per year
gross annual receipts

$4,000

—

Caterer

$500,000 or less per year-
gross annual receipts

$3,000

—

Caterer

$300,000 or less per year-
gross annual receipts

$2,000

—

Caterer

$200,000 or less per year
gross annual receipts

$1,000

—

Caterer

$100,000 or less per year
gross annual receipts

$750

—

Caterer

$50,000 or less per year
gross annual receipts

$500

—

Caterer

$25,000 or less per year
gross annual receipts

$300

—

(Jan. 24, 1934, 48 Stat. 324, ch. 4, § 11; Apr. 30, 1934, 48 Stat. 654, ch. 181, § 1; June 18, 1934, 48 Stat,
997,, ch. 588; July 2, 1935, 49 Stat. 444, ch. 359; Aug. 27, 1935, 49 Stat. 898, 899, ch. 756, §§ 3-7; June 15
1938, 52 Stat. 691, ch. 396, §§ 1, 2; May 27, 1949, 63 Stat. 133, ch. 146, title V, § 501; June 29, 1953, 67
Stat. 103, ch. 159, § 404(d); May 31, 1962, 76 Stat. 89, Pub. L. 87-470, § 1; Dec. 8, 1970, 84 Stat. 1393
Pub. L. 91-535, § 2; Apr. 6, 1977, D.C. Law 1-102, § 2(a), (b), 23 DCR 8732; Apr. 18, 1978, D.C. Law
2-73, § 3, 24 DCR 7066; Mar. 5, 1981, D.C. Law 3-157, § 2(b), 27 DCR 5117; Sept. 29, 1982, D.C. Law
4-157, §§ 6, 15, 29 DCR 3617; Mar. 10, 1983, D.C. Law 4-204, § 2, 30 DCR 185; Aug. 2, 1983, D.C. Law
5-16, § 3, 30 DCR 3193; Mar. 8, 1984, D.C. Law 5-51, § 2(a), 30 DCR 5927; Mar. 7, 1987, D.C. Law
6-217, § 5, 34 DCR 907; Aug. 17, 1991, D.C. Law 9-40, § 2(b), 38 DCR 4974; May 24, 1994, D.C. Law
10-122, § 2(e), 41 DCR 1658; Mar. 26, 1999, D.C. Law 12-202, § 2(b), 45 DCR 8412; Apr. 20, 1999 D C
Law 12-261, § 2003(q)(l), 46 DCR 3142; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30,
2004, D.C. Law 15-187, § 101 (v), 51 DCR 6525.)

ALCOHOLIC BEVERAGES REGULATION

§ 25-511

Historical and Statutory Notes

Effect of Amendments

D.C. Law 15-187 added a new row after the row
designated "Nightclub"; deleted the five rows des-
ignated as "Caterer" which pertained to capacity in
terms of annual revenue and also set forth the

license fees; and added eight new rows designated
as "Caterer".

Legislative History of Laws

For Law 15-187, see notes following § 25-101.

§ 25-505. Fees for Arena C/X by Mayor.

The annual license fee for the retailer's licenses, class Arena C/X, for the DC Arena shall
be established by the Mayor.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 3, 2010, D.C. Law 18-111, § 2082(n)(3), 57
DCR 181.)

Historical and
Effect of Amendments

D.C. Law 18-111, in the section heading, deleted
"and Washington Convention Center" following
"C/X"; and deleted "and for the Washington Con-
vention Center" following "DC Arena".

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2082(n)(3) of Fiscal Year 2010 Budget Sup-

Statutory Notes

port Second Emergency Act of 2009 (D.C. Act
18-207, October 15, 2009, 56 DCR 8234).

For temporary (90 day) amendment of section,
see § 2082(n)(3) of Fiscal Year Budget Support
Congressional Review Emergencv Amendment Act
of 2009 (D.C. Act 18-260, January 4, 2010, 57 DCR
345).
Legislative History of Laws

For Law 18-111, see notes following § 25-101.

§ 25-511. Minimum fee for pool buying group retail importation permit.

The minimum annual license fee for a pool buying group agent importation permit shall be
$1,000, in addition to any other license fees prescribed in this title.

(Sept. 30, 2004, D.C. Law 15-187, § 4010'), 51 DCR 6525; Mar. 2, 2007, D.C. Law 16-191, § 47(d)(2), 53
DCR 6794.)

Historical and

Effect of Amendments

D.C. Law 16-191 validated a previously made
technical correction.
Legislative History of Laws

For Law 15-187, see notes following § 25-101.

For Law 16-191, see notes following § 25-101.
Miscellaneous Notes

Sections 402 and 403 of D.C. Law 15-187 pro-
vide:

"Sec. 402. Rules and regulations.

"The Mayor shall promulgate proposed rules
and regulations to administer this title within 180

Statutory Notes

days of its effective date. The proposed rules and
regulations, as w^ell as any subsequent rules and
regulations amending this title, shall be submitted
to the Council for a 45-day period of review,
excluding Saturdays, Sundays, legal holidays, and
days of Council recess, If the Council does not
approve or disapprove the rules and regulations, in
whole or in part, by resolution with the 45-day
review period, the proposed rules and regulations
shall be deemed approved.

"Sec. 403. Applicability.

"Section 401 shall apply upon the effective date
of the regulations promulgated under section 402."

Chapter 6
Protests, Referendum, and Complaints.

Section

25-601.
25-603.

25-604.

25-605.

Standing to file protest against a license.

Referendum process — general provisions.
[Repealed]

Application to initiate a referendum pro-
cess. [Repealed]

Referendum — ANC review of petition
proposal and statement. [Repealed]

Section

25-606.

25-607.

25-608.

Circulation of approved statement. [Re-
pealed]

Approval of petitions submitted to the
Board. [Repealed]

Licenses exempt from referendum pro-
cess. [Repealed]

§ 25-601 ALCOHOLIC BEVERAGES REGULATION

§ 25-601. Standing to file protest against a license.

The following persons may protest the issuance or renewal of a license, the approval of a
substantial change in the nature of operation as determined by the Board under § 25-404, a
new owner license renewal, or the transfer of a license to a new location:

(1) An abutting property owner;

(2) A group of no fewer than 5 residents or property owners of the District sharing
common grounds for their protest; provided, that in a moratorium zone established under
§ 25-351 (or in existence as of May 3, 2001), a group of no fewer than 3 residents or
property owners of the District sharing common grounds for their protest;

(3) A citizens association incorporated under the laws of the District of Columbia located
within the affected area; provided, that the following conditions are met:

(A) Membership in the citizens association is open to all residents of the area
represented by the association; and

(B) A resolution concerning the license application has been duly approved in accor-
dance with the association's articles of incorporation or bylaws at a duly called meeting,
with notice of the meeting being given at least 10 days before the date of the meeting.

(4) An affected ANC;

(5) In the case of property owned by the District within a 600-foot radius of the
establishment to be licensed, the Mayor;

(6) In the case of property owned by the United States within a 600-foot radius of the
establishment to be licensed, the designated custodian of the property; or

(7) The Metropolitan Police Department District Commander, or his or her designee, in
whose Police District the establishment resides.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 26, 2001, D.C. Law 14-42, § 6(d), 48 DCR
7612; Sept. 30, 2004, D.C. Law 15-187, § 101(x), 51 DCR 6525; Mar. 2, 2007, D.C. Law 16-191, § 47(a), 53
DCR 6794.)

Historical and Statutory Notes

Effect of Amendments Act of 2001 (D.C. Act 14-108, August 3, 2001, 48

D.C. Law 14-12 validated the previously made DCR 7622).

technical correction in par. (2). Legislative History of Laws

D.C. Law 15-187 deleted ", or initiate a referen- „ T , A An l „ .. . _ rtp , __

dum as set forth in § 25-604" following "new For Law 14 ^ 2 > see notes ^Wovnng § 25-120.

location" in the lead-in language; and rewrote par. For Law 15-187, see notes following § 25-101.

(3) which had read as follows: „ T ,,. im , „ ,, e nr _

lt/ ^ A .... , For Law 16-191, see notes following & 25-101.
(3) A citizens association incorporated under

the laws of the District of Columbia located within Delegation of Authority

the affected area;". Delegation of Authority to the Director of the

D.C. Law 16-191, in the introductory language, Office of Property Management to Protest the

inserted "or" preceding "the transfer". Issuance or Renewal of Alcoholic Beverage Licens-

Emergency Act Amendments es Pursuant to D.C. Official Code

For temporary (90 clay) amendment of section, § 25-601(5X2001), see Mayor's Order 2004-182,

see § 6(d) of Technical Amendments Emergency November 9, 2004 (51 DCR 11351).

§ 25-603. Referendum process — general provisions. [Repealed]

Historical and Statutory Notes

Legislative History of Laws

For Law 15-187, see notes following § 25-101.

ALCOHOLIC BEVERAGES REGULATION § 25-607

Repealed
§ 25-604. Application to initiate a referendum process. [Repealed]

(Jan, 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C, Law 9-174, § 2(b), (c), 39 DCR 5859: May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30 2004, D.C. Law
15-187, § 101(y), 51 DCR 6525.)

Historical and Statutory Notes

Legislative History of Laws Issuance or Renewal of Alcoholic Beverage Licens-

For Law 15-187, see notes following § 25-101. es Pursuant to D.C. Official Code

Delegation of Authority § 25-601(5)(2001), see Mayor's Order 2004-182,

Delegation of Authority to the Director of the November 9, 2004 (51 DCR 11351).

Office of Property Management to Protest the

§ 25-605. Referendum — ANC review of petition proposal and statement. [Re-
pealed]

(Jan. 24, 1934, 48 Stat, 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct, 3. 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law
15-187, § 101(y), 51 DCR 6525.)

Historical and Statutory Notes

Legislative History of Laws

For Law 15-187, see notes following § 25-101.

§ 25-606. Circulation of approved statement. [Repealed]

Historical and Statutory Notes

Legislative History of Laws

For Law 15-187, see notes following § 25-101.

§ 25-607. Approval of petitions submitted to the Board. [Repealed]

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug'. 25, 1937, 50 Stat, 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90^50, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept, 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept, 30, 2004, D.C. Law
15-187, § 101(y), 51 DCR 6525.)

§ 25-607
Repealed

Historical and Statutory Notes

Legislative History of Laws

For Law 15-187, see notes following § 25-101.

ALCOHOLIC BEVERAGES REGULATION

§ 25-608. Licenses exempt from referendum process. [Repealed]

(Jan. 24, 1934, 48 Stat. 327, ch. 4, § 14; Aug. 25, 1937, 50 Stat. 802, 803, ch. 766, §§ 1, 2; June 15, 1938, 52
Stat. 691, ch. 396, § 3; June 29, 1953, 67 Stat. 103, ch. 159, § 404(e), (f); Aug. 2, 1968, 82 Stat. 616, Pub. L.
90-450, title IV, § 404; Mar. 5, 1981, D.C. Law 3-146, § 4, 27 DCR 4753; Sept. 29, 1982, D.C. Law 4-157,
§§ 8, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(4), (c), 30 DCR 5927; June 29, 1984, D.C. Law
5-97, § 2, 31 DCR 2556; Mar. 7, 1987, D.C. Law 6-217, § 9, 34 DCR 907; June 5, 1987, D.C. Law 7-7, § 2,
34 DCR 2640; Oct. 3, 1992, D.C. Law 9-174, § 2(b), (c), 39 DCR 5859; May 24, 1994, D.C. Law 10-122,
§ 2(f), 41 DCR 1658; Apr. 20, 1999, D.C. Law 12-261, § 2003(q)(2), 46 DCR 3142; Oct. 20, 1999, D.C. Law
13-39, § 2, 46 DCR 6548; May 3, 2001, DC. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law
15-187, § 101(y), 51 DCR 6525.)

Historical and Statutory Notes

Legislative History of Laws

For Law 15-187, see notes following § 25-101.

Chapter 7
Standards of Operation.

Subchapter I. Staff Requirements.

Section

25-701. Board-approved manager required.

Subchapter II. Posting Of Signs.

25-712. Warning signs regarding dangers of alco-
hol consumption during pregnancy re-
quired.

Subchapter III. Hours; Noise Restrictions;
Control Of Litter.

25-721. Hours of sale and delivery for manufac-
turers and wholesalers.

25-722. Hours of sale and delivery for off- premis-
es retail licensees.

25-723. Hours of sale and service for on-premises
retail licensees and temporary licen-
sees.

Subchapter IV. Sale On Credit,
Gifts, And Loans.

25-731. Credit and delinquency.

25-732. Payment plan for use in extenuating cir-
cumstances. [Repealed]

25-733. Delivery and payment records and re-
ports.

25-735. Gifts and loans from manufacturer pro-
hibited.

25-736. Gifts and loans from wholesaler prohibit-
ed.

Section

Subchapter VI. Limitations On Container
Number, Size, Labeling, And Storage.

25-754. Restrictions on storage of beverages.

Subchapter VII. Physical Space
And Advertising.

25-762. Substantial changes in operation must be
approved.

Subchapter VIII. Reporting; Importation.

25-771. Reporting.

25-772. Unlawful importation of beverages.

Subchapter IX. Minors And
Intoxicated Persons.

25-781. Sale to minors or intoxicated persons
prohibited.

Subchapter X. Temporary Surrender
Of License — Safekeeping.

25-791. Temporary surrender of license — safe-
keeping.

Subchapter XL Valet Parking.

25-796. Valet parking. [Repealed]
25-797. Limitation on transfer of responsibility
for licensee security.

Subchapter XII. Reimbursable Details.

25-798, Reimbursable details.

ALCOHOLIC BEVERAGES REGULATION § 25-722

Subchapter I. Staff Requirements.

§ 25-701. Board-approved manager required.

(a) A person designated to manage an establishment shall possess a manager's license.

(b) A licensee shall notify the Board within 7 calendar days of a manager's conviction for
other than a minor traffic violation.

(c) This section shall not apply to the holder of a wholesaler's license that is not open to the
public or to licensees who personally superintend the establishment during licensed hours of
sale.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; July 18, 2008, D.C. Law 17-201, § 5(b), 55 DCR
6289.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 17-201, in subsec. (c), substituted "the F or Law 17-201, see notes following § 25-101.

holder of a wholesaler's license that is not open to
the public or to licensees" for "licensees".

Subchapter II. Posting Of Signs.

§ 25-712. Warning signs regarding dangers of alcohol consumption during
pregnancy required.

(a) A licensees shall post in a conspicuous place, in accordance with regulations, a sign
which reads: "Warning: Drinking alcoholic beverages during pregnancy can cause birth
defects.".

(b) If the Board determines that action in addition to that required by subsection (a) of this
section is necessary to accomplish the objectives of this title, the Board may require
additional warnings.

(d) Each day of noncompliance shall constitute a separate violation of this section.

(e) A violation of this section shall be punishable by a civil penalty not to exceed $100.

(f) This section shall not apply to the holder of a wholesaler's license that is not open to the
public.

(Jan. 24, 1934, ch. 4, § 47, as added Nov. 19, 1985, D.C. Law 6-57, § 2, 32 DCR 5722; May 3, 2001, D.C.
Law 13-298, § 101, 48 DCR 2959; July 18, 2008, D.C. Law 17-201, § 5(c), 55 DCR 6289.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 17-201 added subsec. (f). For Law 17-201, see notes following § 25-101.

Subchapter III. Hours; Noise Restrictions? Control Of Litter.
§ 25-721. Hours of sale and delivery for manufacturers and wholesalers.

Historical and Statutory Notes

Emergency Act Amendments Hours Public Safety Emergency Act of 2008 (D.C.

For temporary (90 day) amendment of section, Act 17-616, December 19, 2008, 56 DCR 44).

see § 2(a) of Inaugural Celebration Extension of

§ 25-722. Hours of sale and delivery for off-premises retail licensees.

(a) A licensee under an off-premises retailer's license, class A or B, may sell and deliver
alcoholic beverages only between the hours of 9:00 a.m. and midnight, Monday through
Saturday, and during those same hours on December 24 and 31 of each year.

§ 25-722 ALCOHOLIC BEVERAGES REGULATION

(b) The Board may also permit a licensee under an off-premises retailer's license, class B,
to sell or deliver alcoholic beverages between the hours of 9:00 a.m. and midnight on Sundays.

(c) A licensee under a retailer's license, class B, which meets the requirements of
§ 25-303(c)(l) through (3), may also sell or deliver alcoholic beverages between the hours of
9:00 a.m. and 10:00 p.m. on Sundays and between the hours of 10:00 p.m. and midnight,
Monday through Sunday, and on December 24 and December 31 of each year.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(z), 51 DCR
6525; Sept. 14, 2011, D.C. Law 19-21, § 8122, 58 DCR 6226.)

Historical and Statutory Notes

Effect of Amendments Emergency Act of 2010 (D.C. Act 18-451, June 28,

D.C. Law 15-187 rewrote the section which had 2010, 57 DCR 5667).
read as follows: For temporai . y ( 90 day) amendment of section,

"(a) A licensee under an off-premises retailers see § 8012 of p iscal y ear 2 012 Budget Support

hcense, class A or B, may se 1 and deliver alcoholic E Act of 20n (DC Act 19 _ 93 June 29

beverages only between the hours of 9:00 a.m. and ° *L p r^ QQ \

10:00 p.m., Monday through Saturday/and during ZU11 ' 5b DLK bbJJ) '

those same hours on December 24 and 31 of each Legislative History of Laws

y ear - For Law 15-187, see notes following § 25-101.

"(b) The Board mav also permit a licensee un- _ ,, T

der an off-premises retailer's license, class B, to . For o mstor y 0± Law 19 ~ 21 > see notes under

sell or deliver alcoholic beverages between the § 47-305.02.

hours of 9:00 a.m. and 10:00 p.m. on Sundays. Miscellaneous Notes

^ "(c) This section shall apply 90 days after May ghort title: Section 812l of D c Law 19 _ 21

3 ' 200L " provided that subtitle M of title VIII of the act

D "i C « L ^ V - l ?~»l' l * ^ ubsec ,f (a) and (b >' substi " may be cited as "Off-premise Alcohol Act of 2011".
tuted midnight ior k 10 p.m. ,

Emergency Act Amendments Section 8124 of D ' C ' Law 19 ' 21 P rovides:

For temporary (90 day) addition of section, see "Sec. 8124. This subtitle shall apply as of July

§ 2 of Independence Day Class A Retailer Sales 1,2011."

§ 25-723. Hours of sale and service for on-premises retail licensees and
temporary licensees.

(a) The licensee under a hotel license may make available in the room of a registered adult
guest, and charge to the registered guest if consumed, closed miniature containers of alcoholic
beverages at all hours on any day of the week.

(b) Except as provided in § 25-724 and subsections (c) and (d) of this section, the licensee
under a on-premises retailer's license or a temporary license may sell or serve alcoholic
beverages on any day and at any time except between the following hours:

(1) 2:00 a.m. and 8:00 a.m., Monday through Friday, excluding District and federal
holidays;

(2) 3:00 a.m. and 8:00 a.m. on Saturday, and on District and federal holidays; and

(3) 3:00 a.m. and 8:00 a.m. on Sunday.

(c) On each January 1st, the licensee under an on-premises retailer's license or a tempo-
rary license may sell or serve alcoholic beverages until 4:00 a.m.

(d)(1) During the beginning of daylight savings time pursuant to § 28-2711, on the second
Sunday in March of each year, a licensee under an on-premises retailer's license may sell and
serve alcoholic beverages between 3:00 a.m. and 4:00 a.m., if the licensee:

(A) Registers with the Board;

(B) Pays a registration fee of $200; and

(C) Provides written notification, no later than 10 days prior to the beginning of
daylight savings time, to the Board and the Metropolitan Police Department of its
extended hours of operation.

(2) The fees collected pursuant to this subsection shall be used to fund the Reimbursable
Detail Subsidy Program in the ABRA.

ALCOHOLIC BEVERAGES REGULATION § 25-731

(3) The Chief of Police may suspend a licensee's privilege to operate and sell or serve
alcoholic beverages during the extended hour authorized by paragraph (1) of this subsec-
tion if the licensee's operation presents a danger to the public health, safety, or welfare.

(4) A violation of paragraph (1) of this subsection shall constitute a secondary tier
violation subject to the penalties set forth in § 25-830(d).

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 25, 2009, D.C. Law 17-361, § 2(c)(1), 56 DCR
1204; Sept. 14, 2011, D.C. Law 19-21, § 8142, 58 DCR 6226; Dec. 2, 2011, D.C. Law 19-45, § 2, 58 DCR

8937.)

Historical and Statutory Notes

Effect of Amendments 2010 (D.C. Act 18-433, June 7, 2010, 57 DCR

D.C. Law 17-361, in subsec. (b), substituted 4958).

"Friday, excluding District and federal holidays" For temporary (90 day) addition of section, see

for "Friday" in par. (1) and substituted "Saturday, § 2 of Daylight Savings Time Extension of Hours

excluding District and federal holidays" for "Satur- Emergency Act of 2011 (D.C. Act 19-18, March 1,

day" in par. (2). 2011, 58 DCR 2564).

D.C. Law 19-21 rewrote subsec. (b)(3), which Legislative History of Laws

formerly read: For Law 17-361, see notes following § 25-113.

"(3) 3:00 a.m. and 10:00 a.m. on Sunday." For history of Law 19-21, see notes under

D.C. Law 19-45, in subsec. (b), substituted § 47-305.02.

"§ 25-724 and subsections (c) and (d) of this sec- Law 19-45, the "Daylight Savings Time Exten-

tion"for"§ 25-724"; and added subsec. (d). sion of Hours Act of 2011", was introduced in

Emergency Act Amendments Co ; mcil , a f d * s si ^ ned ™ No " 19 " 119 ' w £ ich was

_ . . referred to the Committee on Human Services.

For temporary (90 day) amendment of section, The Bm was adopted on first and second readings

see § 2 of Inaugural Celebration Extension of on Jul 12? 20n and September 21, 2011, respec-

Hours Emergency Act of 2008 (D.C. Act 17-614, tively< Signed by the Mayor on 0ctober n? 2on>

December 19, 2008, 56 DCR 40). it wag assigned Act No> 19 _ 175 and transmitted to

For temporary (90 day) amendment of section, both Houses of Congress for its review. D.C. Law

see § 2(b) of Inaugural Celebration Extension of 19-45 became effective on December 2, 2011.

Hours Public Safety Emergency Act of 2008 (D.C. Miscellaneous Notes

Act 17-616, December 19, 2008, 56 DCR 44). Short title: gection 8141 of D . C . Law 19-21

For temporary (90 day) addition, see § 2 of provided that subtitle O of title VIII of the act may

World Cup Extension of Hours Emergency Act of be cited as "Opening Hours Act of 2012".

Subchapter IV. Sale On Credit, Gifts, And Loans.

§ 25-731. Credit and delinquency.

(a) For the purposes of this section, the term "payment" means the delivery to the
manufacturer or wholesaler. of cash or a check, draft, or other order for payment; provided,
that the check, draft, or other order of payment is drawn only on the bank account of the
retailer.

(b) No alcoholic beverage shall be sold by a manufacturer or wholesaler to a retailer, or
purchased by a retailer, except on the following terms: (1) full payment in cash on delivery, or
(2) full payment in cash before the 16th day of the month following the month of purchase or
delivery.

(c) A retailer who fails to make payment in full in accordance with the terms of purchase
shall not, during the period of delinquency, make any further purchases except for cash on
delivery, and, during the period of delinquency, a manufacturer or wholesaler who has
knowledge of such delinquency shall not sell any alcoholic beverages to the retailer except for
cash on delivery.

(d) Subsections (b) and (c) of this section shall constitute a reasonable extension of credit
and no enlargement or extension of such terms, whether cash or credit, shall be granted by
the manufacturer or wholesaler or accepted by the retailer.

(e) Repealed.

(f) Repealed.

§ 25-731 ALCOHOLIC BEVERAGES REGULATION

(g) Repealed.

(May 3, 2001, D.C. Law 13-298, § 1.01/48 DCR 2959; Mar. 25, 2009, D.C. Law 17-361, § 2(c)(2), 56 DCR
1204.)

Historical and Statutory Notes

Effect of Amendments "(g) The failure of a manufacturer or wholesaler

D.C. Law 17—361 repealed subsecs. (e), (f), and to deposit the payment in the manufacturer's or

(g), which had read as follows: wholesaler's bank for credit or collection, or pres-

"(e) The failure of a retailer who contracts to ent the payment to the bank on which it is drawn,

purchase an alcoholic beverage for full payment in within 5 days from the receipt of a payment shall

cash on delivery to make full payment upon deliv- constitute a violation of this chapter. Each day that

ery shall constitute a violation of this chapter. the faUure continues shall constitute a separate

"(f) A retailer shall not satisfy the obligation to violation."
pay for an alcoholic beverage unless the payment

is dated on or before the date payment is diie and Legislative History of Laws
is, upon presentation, promptly honored by the For Law 17-361, see notes following § 25-113.

bank on which it is drawn.

§ 25-732. Payment plan for use in extenuating circumstances. [Repealed]

(May 3, 2001, D.C. Law 13-29S, § 101, 4f DCR 2959; Mar. 25, 2009, D.C. Law 17-361, 2(c)(3), 56 DCR
1204.)

Historical and Statutory Notes

Legislative History of Laws

For Law 17-361, see notes following § 25-113.

§25-733. Delivery and payment records and reports.

(a) A delivery of an alcoholic beverage to a licensee shall be accompanied by an invoice of
sale or delivery which shall bear the date of delivery of the alcoholic beverages.

(b) Before the 26th day of each month, each manufacturer and wholesaler shall file with
each other manufacturer or wholesaler within the District, on a form prescribed by the Board,
a statement under penalties of perjury showing the following:

(1) The name, including trade name, and address of each retailer who has been required
to make payment in cash for alcoholic beverages under § 25-731 (c);

(2) All delinquent accounts; and

(3) All checks, drafts, or other orders for payment received from any retailer, which,
since the previous report, were dishonored when presented for payment, when such
dishonored checks, drafts, or other orders for payment exceed $15,000.

(c) A manufacturer or wholesaler who, after receiving notification of delinquency by a
retailer under § 25-731 (c), extends credit to any retailer, shall be deemed to have violated
§ 25-731(b).

(cl) Repealed.

(e) Repealed.

(f) Repealed.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 25, 2009, D.C. Law 17-361, § 2(c)(4), 56 DCR
1204.)

Historical and Statutory Notes

Effect of Amendments wholesaler shall submit to the Board, on a form

D.C. Law 17-361, in subsec. (b)(3), substituted prescribed by the Board, a list of the following:

"presented for payment, when such dishonored „ m A n , + -i 4-x, +■ i, u • j *.

checks, drafts, or other orders for payment exceed , (1) M ret f te ^ h f\ b 1 eer ! reqmred to

$15,000" for "presented for payment"; and re- make P a y ment m cash for alcoholic beverages un-

pealed subsecs. (d), (e), and (f), which had read as der 2 5-731(c), during the preceding 90 days; and

follows: "(2) All accounts that have been delinquent dur-

"(d) Before March 2, June 2, September 2, and ing the preceding 90 days, including the amount of

January 2 of each year, each manufacturer and the delinquency.

ALCOHOLIC BEVERAGES REGULATION § 25-736

"(e) Each manufacturer and wholesaler shall, "(f) Failure to file timely a report required by
within 24 hours of receipt from the bank or other this section shall constitute a violation of this chap-
depository of notice of dishonor of a check, draft ter."
or other order for payment which the manufactur- , T
er or wholesaler received from a retailer, notify in Legislative History ot Laws
writing the Board of the notice of dishonor. For Law 17-361, see notes following § 25-113.

§ 25-735. Gifts and loans from manufacturer prohibited.

(a) A manufacturer, whether or not licensed under this title, shall not engage in the
following transactions with a wholesale or retail licensee:

(1) Loan or give money;

(2) Sell, rent, loan, or give equipment, furniture, fixtures, or property; or

(3) Give or sell a service.

.(b) A retail licensee shall not engage in the following transactions with a manufacturer,
whether or not licensed under this title:

(1) Receive or accept a loan or gift of money;

(2) Purchase from, rent from, borrow, or receive by gift equipment, furniture, fixtures, or
property; or

(3) Accept or receive a service.

(c) Notwithstanding subsections (a) and (b) of this section, with the prior approval of the
Board, a manufacturer may sell, give, rent, or loan to a retail licensee any service or article of
property costing the manufacturer not more than $500 and a retail licensee may purchase
from, rent from, borrow, or receive by gift from a manufacturer any service or article of
property costing the manufacturer not more than $500.

'(d) Notwithstanding subsections (a), (b), and (c) of this section, with the prior approval of
the Board, a manufacturer may sell, give, rent, or loan to a retail licensee computer
equipment for the purpose of tracking the sale or delivery of alcoholic beverages.

(Jan. 24, 1934, 48 Stat. 330, ch. 4, § 18; Aug. 27, 1935, 49 Stat. 902, ch. 756, § 15; Sept. 29, 1982, D.C.
Law 4-157, §§ 10, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(6), 30 DCR 5927; May 3, 2001,
D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(aa), 51 DCR 6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187, in subsecs. (b) and (c), deleted For Law 15_187, see notes following § 25-101.

"wholesale or" preceding "retail licensee"; and
added subsec. (d).

§ 25-736. Gifts and loans from wholesaler prohibited.

(a) A licensed wholesaler of alcoholic beverages, whether or not licensed under this title,
shall not engage in the following transactions with a retail licensee:

(1) Lend or give any money;

(2) Sell equipment, furniture, fixtures, or property, except merchandise sold at the fair
market value for resale by the licensee;

(3) Rent, loan, or give any equipment, furniture, fixtures, or property; or

(4) Give or sell any service.

(b) A retail licensee shall not engage in the following transactions with a wholesaler:

(1) Receive or accept any loan or gift of money;

(2) Purchase equipment, furniture, fixtures, or property, except merchandise purchased
at the fair market value for resale;

(3) Rent from, borrow, or receive by gift equipment, furniture, fixtures, or property; or

(4) Receive any service.

(c) Notwithstanding subsections (a) and (b) of this section, with the prior approval of the
Board, a wholesaler may sell, give, rent, or loan to a retail licensee any sexwice or article of
property costing the wholesaler not more than $500 and a retail licensee may purchase from,

§ 25-736 ALCOHOLIC BEVERAGES REGULATION

rent from, borrow, or receive by gift from a wholesaler any service or article of property
costing the wholesaler not more than $500.

(d) Notwithstanding subsections (a), (b), and (c) of this section, with the prior approval of
the Board, a wholesaler may sell, rent, give, loan to a retail licensee computer equipment for
the purpose of tracking the sale or delivery of alcoholic beverages.

(Jan. 24, 1934, 48 Stat. 331, ch. 4, § 19; Aug. 27, 1935, 49 Stat. 903, ch. 756, § 16; Sept. 29, 1982, D.C.
Law 4-157, §§ 11, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(7), 30 DCR 5927; May 3, 2001,
D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(bb), 51 DCR 6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187 added subsec. (d). For Law 15-187, see notes following § 25-101.

Subchapter VI. Limitations On Container Number, Size, Labeling, And Storage.
§ 25-754. Restrictions on storage of beverages.

Notes of Decisions

2. Civil rights actions relief. U.S.C.A. Const. Art. 1, § 8, cl. 3; 42
Plaintiff in § 1983 action challenging local ware- U.S.C.A. § 1983; D.C.Code 1981, § 25-114(f); Dis-
housing requirements of Wholesale Liquor Indus- trict of Columbia Alcoholic Beverage Control Act,
try Storage Act as commerce clause violation was § 2, 48 Stat. 319. Milton S. Kronheim & Co., Inc.
not required to first seek exemption from District v. District of Columbia, 1995, 877 F.Supp. 21,
of Columbia Alcoholic Beverage Control Board; reversed 91 F.3d 193, 319 U.S.App.D.C. 389, re-
exhaustion of remedies was not normally required hearing denied, certiorari denied 117 S.Ct. 1468,
under § 1983, and such act would have been futile 520 U.S. 1186, 137 L.Ed.2d 681. Civil Rights <3=>
since Board could not have provided adequate 1321

Subchapter VII. Physical Space And Advertising.
§ 25-762. Substantial changes in operation must be approved.

Notes of Decisions

Sufficiency of evidence 1 cated on license application that its restaurant

would have "capacity" of 99 could not reasonably
be read to impose limit on patrons, number of

1. Sufficiency of evidence " s f ts " specified on certificate of occupancy was

not intended as limit on number of patrons, and

Substantial evidence did not support finding of recor d did not support Board's conclusion that

Alcoholic Beverage Control Board that corpora- corporation agreed to limit on number of patrons

tion, doing business as restaurant, made substan- that restaurant could admit. 2461 Corp. v. Dis-

tial change in operations, with regard to occu- trict of Columbia Alcoholic Beverage Control Bd.,

pancy, without Board approval, as would support 2008, 950 A.2d 50. Intoxicating Liquors <^>

imposition of sanctions; fact that corporation indi- 106(2)

Subchapter VIII. Reporting; Importation.

§ 25-771. Reporting.

(a) Before the 21st day of each month, a licensee under a manufacturer's license shall
furnish to the Board, on a form to be prescribed by the Mayor, a statement, under penalties
of perjury, showing the quantity of each kind of alcoholic beverage, except beer, manufac-
tured during the preceding calendar month. For the purposes of this section, alcoholic
beverages shall not be considered as manufactured until they are ready for sale.

(b) Twice a year, a licensee under a wholesaler's or retailer's license shall furnish to the
Board, on a form to be prescribed by the Mayor, a statement, under penalties of perjury,
showing:

(1) The quantity of each kind of beverage, except beer, purchased by the license holder
during the preceding 6 calendar months;

ALCOHOLIC BEVERAGES REGULATION § 25-772

(2) The date of each such purchase;

(3) The name of the person from whom purchased, including the license number of the
vendor, if licensed hereunder; and

(4) The quantity and kind of beverages in each purchase.

(Jan. 24, 1934, 48 Stat. 332, ch. 4, § 22; Apr. 30, 1934, 48 Stat. 654, ch. 181, § 2; Sept. 29, 1982, D.C. Law
4-157, § 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(8), 30 DCR 5927; May 3, 2001, D.C. Law
13-298, § 101, 48 DCR 2959; Oct. 26, 2001, D.C. Law 14-42, § 6(e), 48 DCR 7612; Mar. 13, 2004, D.C.
Law 15-105, § 26(b)(2), 51 DCR 881.)

Historical and Statutory Notes

Effect of Amendments Act of 2001 (D.C. Act 14-108, August 3, 2001, 48

D.C. Law 14^2, in subsec. (a), substituted "cal- DCR 7622).

endar month" for "month". Legislative History of Laws

D.C. Law 15-105, in subsec. (a), validated a ' T . . An , „ ,, . ~ oc 1on

previously made technical correction. For Law U ^ see ™ tes followin £ * 25 " 120 -

Emergency Act Amendments For Law 15-105, see notes following § 25-210.

For temporary (90 day) amendment of section,
see § 6(e) of Technical Amendments Emergency

§ 25-772. Unlawful importation of beverages.

(a) Only a licensee under a manufacturer's, wholesaler's, or common carrier's license, or
retailers license under a validly issued import permit shall transport, import, bring, or ship or
cause to be transported, imported, brought, or shipped into the District from outside the
District any wines, spirits, or beer in a quantity in excess of one case at any one time.

(b) No public or common carrier shall transport or bring into the District wine, spirits, or
beer in a quantity in excess of one case per location in any one calendar month for delivery to
any one person in the District other than the licensee under a manufacturer's, wholesaler's, or
retailer's license.

(c) This section shall not apply to persons possessing old stocks who are moving into the
District, to embassies or diplomatic representatives of foreign countries, to wines imported for
religious or sacramental purposes, to wine, spirits, and beer to be delivered to the licensee
under a manufacturer's, wholesaler's, or retailer's license, or to any persons wishing to have
liquor chocolates delivered to their residence. The term "liquor chocolates" may include
other types of candies that have small amounts of liquor contained in the candy.

(d) The penalty for violation of this section shall consist of (1) the forfeiture of the
beverages transported, imported, brought, or shipped, or caused to be transported, imported,
brought, or shipped in violation of this section, and (2) a fine of not more than $500 or
imprisonment for not more than 6 months.

(e) In addition to other penalties provided in this section, any person who violates the
provisions of this section shall be liable for any tax, penalties, and interest provided for in this
title.

(Jan. 24, 1934, ch. 4, § 39; Aug. 25, 1937, 50 Stat. 803, ch. 766, § 4; Dec. 26, 1967, 81 Stat 728, Pub. L.
90-223, § 1; July 24, 1982, D.C. Law 4-131, § 302, 29 DCR 2418; May 3, 2001, D.C. Law 13-298, § 101,
48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(cc), 51 DCR 6525; July 18, 2008, D.C. Law 17-201,
§ 5(d), 55 DCR 6289.)

Historical and Statutory Notes

Effect of Amendments licensee under a manufacturer's, wholesaler's, or

D.C. Law 15-187 rewrote subsec. (c) which had retailer's license."

read as follows: D.C. Law 17-201, in subsec. (a), substituted

"(c) The provisions of this section shall not ap- "case" for "gallon"; and, in subsec. (b), substituted

ply to persons possessing old stocks who are mov- "case per location" for "quart",

ing into the District, to embassies or diplomatic Legislative History of Laws

representatives of foreign countries, nor to wines _ _ ^ , nr7 , r „ . t . rtr i M

imported for religious or sacramental purposes, or For Law 15 " 187 ' see notes following § 25-101.

to wine, spirits, and beer to be delivered to the For Law 17-201, see notes following § 25-101.

§ 25-781 ALCOHOLIC BEVERAGES REGULATION

Subchapter IX. Minors And Intoxicated Persons.

§ 25-781. Sale to minors or intoxicated persons prohibited.

(a) The sale or delivery of alcoholic beverages to the following persons is prohibited:

(1) A person under 21 years of age, either for the person's own use or for the use of any
other person, except as provided in § 25-784(b);

(2) An intoxicated person, or any person who appears to be intoxicated; or

(3) A person of notoriously intemperate habits.

(b) A retail licensee shall not permit at the licensed establishment the consumption of an
alcoholic beverage by any of the following persons:

(1) A person under 21 years of age;

(2) An intoxicated person, or any person who appears to be intoxicated; or

(3) A person of notoriously intemperate habits.

(c) A licensee or other person shall not, at a licensed establishment, give, serve, deliver, or
in any manner dispense an alcoholic beverage to a person under 21 years of age, except as
provided in § 25-784(b).

(d) A licensee shall not be liable to any person for damages claimed to arise from refusal to
sell an alcoholic beverage or refusal to permit the consumption of an alcoholic beverage in its
establishment under the authority of this section.

(e) A person alleged to have violated this section may be issued a citation under
§ 23-1110(b)(l). The person shall not be eligible to forfeit collateral.

(f) Upon finding that a licensee has violated subsections (a), (b), or (c) of this section in the
preceding 2 years:

(1) Upon the 1st violation, the Board shall fine the licensee not less than $2,000, and not
more than $3,000, and suspend the licensee for 5 consecutive days; provided, that the 5-day
suspension may be stayed by the Board for one year;

(2) Upon the 2nd violation, the Board shall fine the licensee not less than $3,000, and not
more than $5,000, and suspend the licensee for 10 consecutive days; provided, that the
Board may stay up to 6 days of the 10-day suspension for one year;

(3) Upon the 3rd violation, the Board shall fine the licensee not less than $5,000, and not
more than $10,000, and suspend the licensee for 15 consecutive days, or revoke the license;
provided, that the Board may stay up to 5 days of the 15-day suspension for one year;

(4) Upon the 4th violation, the Board may revoke the license; and

(5) The Board may revoke the license of a licensed establishment that has 5 or more
violations of this section within a 5-year period.

(Jan. 24, 1934, 48 Stat. 331, ch. 4, § 20; Aug. 27, 1935, 49 Stat, 901, ch. 756, § 10; June 29, 1953, 67 Stat.
104, ch. 159, § 404(g); Sept. 29, 1982, D.C. Law 4-157, § 12, 29 DCR 3617; Sept. 26, 1984, D.C. Law
5-106, § 2, 31 DCR 3381; Feb. 24, 1987, D.C. Law 6-178, § 2(a), 33 DCR 7654; Mar. 7, 1987, D.C. Law
6-217, § 12, 34 DCR 907; Sept. 11, 1993, D.C. Law 10-12, § 2(c), 40 DCR 4020; May 24, 1994, D.C. Law
10-122, § 2(i), 41 DCR 1658; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 1, 2002, D.C. Law
14-190, § 1702(k), 49 DCR 6968; Mar. 25, 2009, D.C, Law 17-361, § 2(c)(5), 56 DCR 1204.)

Historical and Statutory Notes

Effect of Amendments Emergency Act of 2002 (D.C. Act 14-453, July 23,

D.C. Law 14-190 added subsec. (e). 2002, 49 DCR 8026).

D.C. Law 17-361 added subsec. (f). Legislative History of Laws
Emergency Act Amendments For Law 14 _ 190j gee notes following § 25-101.

For temporary (90 dav) amendment, of section,
see § 1702(k) of' Fiscal Year 2003 Budget Support For Law 17 - 361 > see notes Mowing § 25-113.

Notes of Decisions

2. Tort actions — In genera! cated parties that injure a third party. Wadley v.

The District of Columbia only assesses liability Aspillaga, 2001, 163 F.Supp.2d 1. Intoxicating Li-
against tavern owners who serve obviously intoxi- quors <s=* 285

ALCOHOLIC BEVERAGES REGULATION § 25-796

Repealed
Under District of Columbia law, statute that persons other than tavern owners. Wadley v.
imposes liability against tavern owners, who serve Aspillaga, 2001, 163 F.Supp.2d 1. Intoxicating Li-
obviously intoxicated persons who then injure a quors @=> 299
third party, was not intended to impose liability on

Subchapter X. Temporary Surrender Of License— Safekeeping.

§ 25-791. Temporary surrender of license — safekeeping.

(a) A license which is discontinued for any reason shall be surrendered by the licensee to
the Board for safekeeping. The Board shall hold the license until the licensee resumes
business at the licensed establishment or the license is transferred to a new owner. If the
licensee has not initiated proceedings to resume operations or transfer the license within 60
days after suspension, the Board may deem this license abandoned after giving notice to the
licensee. The licensee has 14 days to respond to the Board's notice to request continued
safekeeping.

(b) The Board may extend the period of safekeeping beyond 60 days for reasonable cause,
such as fire, flood, other natural disaster; rebuilding or reconstruction; or to complete the sale
of the establishment.

(c) Licenses in safekeeping beyond 60 days, as extended by the Board, shall be reviewed by
the Board every 6 months to ensure that the licensee is making reasonable progress on
returning to operation.

(d) This section shall not relieve a licensee from the responsibility for renewing the license
upon its expiration.

(e) If a licensee notifies the Board that the licensee has ceased to do business under the
license or if the Board cancels the license under this section, the license shall be marked as
"canceled."

(f) Licenses which are restored after being held in safekeeping for longer than 2 years
shall be subject to the license renewal process set forth in Chapter 4.

(g) A license suspended by the Board under this title shall be stored at the Board.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 13, 2004, D.C. Law 15-105, § 104(a), 51 DCR
881.)

Historical and Statutory Notes

Effect of Amendments Legislative History of Laws

D.C. Law 15-105 validated a previously made F or Law 15-105, see notes following § 25-210

technical correction.

Notes of Decisions

Authority of Board 1 deprive board of authority to revoke license based
on its ultimate conclusion that the continued opera-
tion of licensee's establishment presented an immi-
1. Authority of Board nent danger to the health and safety of the public.
Liquor licensee's attempt to have the Alcoholic 800 Water Street, Inc. v. District of Columbia
Beverage Control Board designate its license as Alcoholic Beverage Control Bd., 2010, 992 A.2d
cancelled, before the board could revoke it, did not 1272. Intoxicating Liquors @=> 106(2)

Subchapter XL Valet Parking.

§ 25-796. Valet parking. [Repealed]

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 13, 2004, D.C Law 15-105, § 104(b), 51 DCR
881; Mar. 2, 2007, D.C. Law 16-191, § 48(k), 53 DCR 6794; July 18, 2008, D.C Law 17-201, § 5(e), 55

DCR 6289.)

§ 25-796 ALCOHOLIC BEVERAGES REGULATION

Repealed

Historical and Statutory Notes
Legislative History of Laws For Law 16-191, see notes following § 25-101.

For Law 15-105, see notes following § 25-210 For Law 17-201, see notes following § 25-101.

§ 25-797. Limitation on transfer of responsibility for licensee security.

(a) The holder of an on-premises retailer's license may rent out or provide the licensed
establishment for use by a third party or promoter for a specific event; provided, that the
licensee maintains ownership and control of the licensed establishment for the duration of the
event, including modes of ingress or egress, and the staff of the establishment, including bar
and security staff.

(b) Under no circumstances shall a licensee permit the third party or promoter to be
responsible for providing security or maintain control over the establishment's existing
security personnel.

(July 18, 2008, D.C. Law 17-201, § 5(f), 55 DCR 6289.)

Historical and Statutory Notes

Legislative History of Laws

For Law 17-201, see notes following § 25-101.

Subchapter XII. Reimbursable Details.

§ 25-798. Reimbursable details.

(a) For the purposes of this section, the term:

(1) Agreement means a written contract, including provisions for the staffing require-
ment of the reimbursable details in accordance with subsection (c) of this section, and
compensation of the MPD by the licensee when reimbursable details are requested by the
licensee.

(2) MPD means Metropolitan Police Department.

(3) Reimbursable detail means an assignment of MPD officers to patrol the surrounding
area of an establishment for the purpose of maintaining public safety, including the
remediation of traffic congestion and the safety of public patrons, during their approach
and departure from the establishment.

(b) A licensee or licensees, independently or in a group, may enter into an agreement with
the MPD to pi'ovide for reimbursable details.

(c) Subject to adequate staffing of the police service areas and an assessment by the MPD
of its staffing requirements, the MPD may staff reimbursable details as requested by the
licensee. The MPD shall only use officers for this purpose who are overtime and would not
otherwise be on duty at the time of the reimbursable detail.

(d) The MPD shall establish policies and procedures to implement the provisions of this
section.

(e) The Mayor shall, in consultation with licensees, promulgate policies, rules and proce-
dures to identify entertainment areas in the District, and establish security plans thereunder
delineating the reimbursable detail deployment needs of those areas.

(Sept. 23, 2005, D.C. Law 16-20, § 2(a), 52 DCR 6575.)

Historical and Statutory Notes

Temporary Amendments of Section Section 4(b) of D.C. Law 17-380 provides that

Section 2 of D.C. Law 17-380, in subsec. (b), the act shall expire after 225 days of its having
substituted "group, including an association, which taken effect,
includes licensees in its membership, may" for
"group, may".

ALCOHOLIC BEVERAGES REGULATION

§ 25-801

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2 of Reimbursable Details Clarification
Emergency Amendment Act of 2008 (D.C. Act
17-683, January 12, 2009, 56 DCR 1109).

Legislative History of Laws

Law 16-20, the "Emergency Suspension of Li-
quor Licenses Act of 2005", was introduced in

Council and assigned Bill No. 16-134 which was
referred to the Committee of Consumer and Regu-
latory Affairs. The Bill was adopted on first and
second readings on May 3, 2005, and June 7, 2005,
respectively. Signed by the Mayor on June 29,
2005, it was assigned Act No. 16-120 and transmit-
ted to both Houses of Congress for its review.
D.C. Law 16-20 became effective on September 23,
2005.

Chapter 8
Enforcement, Infractions, and Penalties.

Subchapter I. Enforcement.

Section

25-801. Authority of the Board to enforce this
title; enforcement responsibilities of
ABRA investigators and Metropolitan
Police Department.

Subchapter II. Revocation, Suspension,
And Civil Penalties.

25-821.

Revocation or suspension — general provi-
sions.

Section

25-823.

25-826.

25-827.

25-828.
25-830.
25-831.

Revocation or suspension for violations of
this title or misuse of licensed premis-
es.

Summary revocation or suspension.

Request for suspension or revocation of
license by Chief of Police.

Notice of suspension or revocation.

Civil penalties.

Penalty for violation where no specific
penalty provided; additional penalty
for failure to perform certain required
acts.

Subchapter I. Enforcement.

§ 25-801. Authority of the Board to enforce this title; enforcement responsi-
bilities of ABRA investigators and Metropolitan Police Depart-
ment.

(a) The Board shall have the authority to enforce the provisions of this title with respect to
licensees and with respect to any person not holding a license and selling alcohol in violation
of the provisions of this title.

(b) Subject to subsection (c) of this section, ABRA investigators and the Metropolitan
Police Department shall issue citations for civil violations of this title that are set forth in the
schedule of civil penalties established under § 25-830.

(c) A citation for any violation for which the penalty includes the suspension of a license
shall be issued under the direct authority of the Board as a result of an investigation carried
out by ABRA investigators.

(d) Prosecutions for misdemeanors under this title shall be prosecuted and initiated by
information filed in the Superior Court of the District of Columbia by the Corporation
Counsel. Prosecutions for felonies under this title shall be prosecuted by the United States
Attorney for the District of Columbia.

(e) Violations committed by an unlicensed person selling alcohol in violation of the
provisions of this title shall be forwarded by the Board to the Corporation Counsel for
prosecution.

(f) ABRA investigators may request and check the identification of a patron inside of or
attempting to enter an establishment with an alcohol license. ABRA investigators may seize
evidence that substantiates a violation under this title, which shall include seizing alcoholic
beverages sold to minors and fake identification documents used by minors.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 30, 2004, D.C. Law 15-187, § 101(dd), 51 DCR
6525.)

§ 25-801 ALCOHOLIC BEVERAGES REGULATION

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187 added subsec. (f). For Law 15-187, see notes following § 25-101.

Subchapter II. Revocation, Suspension, And Civil Penalties.
§ 25-821. Revocation or suspension — general provisions.

Notes of Decisions

Authority of Board 2 deprive board of authority to revoke license based

Hearings 3 on its ultimate conclusion that the continued opera-

tion of licensee's establishment presented an immi-
nent danger to the health and safety of the public.

1. In general 800 Water Street, Inc. v. District of Columbia
' Liquor licensee's action seeking review of Dis- Alcoholic Beverage Control Bd., 2010, 992 A.2d

trict of Columbia Alcoholic Beverage Control 1272 - Intoxicating Liquors <B=» 106(2)

Board's revocation of its license presented a live ^ Hearings

controversy, even though licensee's lease had ex- ' ' ,. .. , ,

pired, given that revocation of a liquor license Former liquor licensee s insurers argument

earned collateral consequences regarding issuance that revocation of its license to serve alcohol, and

of future licenses for the holder of the license. the statutory five-year ban on obtaining a license,

Levelle, Inc. v. District of Columbia Alcoholic Bev- ~uld not take place unless it had been given a

erage Control Bd., 2007, 924 A.2d 1030. Intoxicate hearing before the Alcoholic Beverage Control

ing Liquors ©=108.10(3) ?°f d ' and an °PP°rtunity to be heard m its

6 H defense, was wawed for appellate review, since

2. Authority of Board licensee did not raise argument before the board.
Liquor licensee's attempt to have the Alcoholic 800 Water Street, Inc. v. District of Columbia

Beverage Control Board designate its license as Alcoholic Beverage Control Bd., 2010, 992 A.2d
cancelled, before the board could revoke it, did not 1272. Intoxicating Liquors <s=> 108.10(2)

§ 25-823. Revocation or suspension for violations of this title or misuse of
licensed premises.

The Board may fine, as set forth in the schedule of civil penalties established under
§ 25-830, and suspend, or revoke the license of any licensee during the license period if:

(1) The licensee violates any of the provisions of this title, the regulations promulgated
under this title, or any other laws of the District, including the District's curfew law;

(2) The licensee allows the licensed establishment to be used for any unlawful or
disorderly purpose;

(3) The licensee fails to superintend in person, or through a manager approved by the
Board, the business for which the license was issued;

(4) The licensee allows its employees or agents to engage in prostitution, as defined
under § 22-2701.01(1), or engage in sexual acts or sexual contact, as defined under
§ 22-3001, at the licensed establishment;

(5) The licensee fails or refuses to allow an ABRA investigator, a designated agent of
ABRA, or a member of the Metropolitan Police Department to enter or inspect without
delay the licensed premises or examine the books and records of the business, or otherwise
interferes with an investigation; or

(6) The licensee fails to follow its voluntary agreement, security plan, or Board order.

(Jan. 24, 1934, 48 Stat. 330, ch. 4, § 17; Aug. 27, 1935, 49 Stat. 900, ch. 756, § 9; Aug. 25, 1937, 50 Stat.
803, ch. 766, § 3; Apr. 26, 1950, 64 Stat. 88, ch. 106; Dec. 8, 1970, 84 Stat. 1393, Pub. L. 91-535, § 3(a);
Sept. 29, 1982, D.C. Law 4-157, §§ 9, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(5), 30 DCR
5927; Mar. 7, 1987, D.C. Law 6-217, § 11; 34 DCR 907; Sept. 11, 1993, D.C. Law 10-12, § 2(b), 40 DCR
4020; May 24, 1994, D.C. Law 10-122, § 2(h), 41 DCR 1658; Apr. 30, 1998, D.C. Law 12-97, § 2, 45 DCR
1517; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 13, 2004, D.C. Law 15-105, § 4, 51 DCR
881; Sept. 30, 2004, D.C. Law 15-187, § 101(ee), 51 DCR 6525; July 18, 2008, D.C. Law 17-201, § 6(a), 55
DCR 6289; Mar. 25, 2009, D.C, Law 17-361, § 2(d)(2), 56 DCR 1204.)

ALCOHOLIC BEVERAGES REGULATION

§ 25-826

Historical and

Effect of Amendments

D.C. Law 15-105, in par. (1), substituted "of the
District" for "if the District".

D.C. Law 15-187, in pars. (2) and (3), made
nonsubstantive changes; and added par. (4).

D.C. Law 17-201, in the lead-in text, substituted
"may fine, as set forth in the schedule of civil
penalties established under § 25-830, suspend,"
for "may suspend"; in par. (1), substituted "laws of
the District, including the District's curfew law"
for "laws of the District"; in par. (3), deleted "or"

Statutory Notes

from the end; in par. (4), substituted a semicolon
for a period at the end; and added pars. (5) and
(6).

D.C. Law 17-361, in the lead-in language, substi-
tuted "and suspend" for "suspend".

Legislative History of Laws

For Law 15-105, see notes following § 25-210

For Law 15-187, see notes following § 25-101.

For Law 17-201, see notes following § 25-101.

For Law 17-361, see notes following § 25-113.

Notes of Decisions

4. Grounds for suspension or revocation

An "unlawful or disorderly purpose," under the
Alcoholic Beverage Regulation provision allowing
the Alcoholic Beverage Control Board to suspend a
liquor license, can be imputed to a licensee who
engages in a method of operation that is conducive
to unlawful or disorderly conduct. Levelle, Inc. v.
District of Columbia Alcoholic Beverage Control
Bd., 2007, 924 A.2d 1030. Intoxicating Liquors <^>
106(2)

7. Sufficiency of evidence

Substantial evidence of a correlation between
increased incidents of crime within 1,000 feet of
liquor licensee's establishment and the operation of
the establishment supported Alcoholic Beverage
Control Board's revocation of liquor license; Board
heard the testimony of two police officers regard-
ing incident in which one patron assaulted another
with the broken bottle, and heard testimony as to
choking incident, shooting of ambulance personnel,
altercation between two male patrons, fatal stab-

bing near club entrance, a shooting incident within
1,000 feet of the establishment, and patron's as-
sault on police officer. Levelle, Inc. v. District of
Columbia Alcoholic Beverage Control Bd., 2007,
924 A.2d 1030. Intoxicating Liquors ^ 108.5

Substantial evidence supported the Alcoholic
Beverage Control Board's conclusion that liquor
licensee had permitted licensed establishment to
be used for an unlawful or disorderly purpose, in
support of the Board's revocation of liquor license;
the Board heard the testimony of two police offi-
cers regarding incident in which one patron as-
saulted another with the broken bottle and heard
testimony of Emergency Management Agency and
licensee's security staff as to other security inci-
dents, providing support for finding that there was
inadequate staffing or supervision to prevent the
disorder at the establishment. Levelle, Inc. v.
District of Columbia Alcoholic Beverage Control
Bd., 2007, 924 A.2d 1030. Intoxicating Liquors <©=>
108.5

§ 25-826. Summary revocation or suspension.

(a) If the Board determines, after investigation, that the operations of a licensee present an
imminent danger to the health and safety of the public, the Board may summarily revoke,
suspend, fine, or restrict, without a hearing, the license to sell alcoholic beverages in the
District.

(b) The Board may summarily revoke, suspend, fine, or restrict the license of a licensee
whose establishment has been the scene of an assault on a police officer, government
inspector or investigator, or other governmental official, who was acting in his or her official
capacity, when such assault occurred by patrons who were within 1,000 feet of the establish-
ment.

(c) A licensee may request a hearing within 72 hours after service of notice of the summary
revocation, suspension, fine, or restriction of a license. The Board shall hold a hearing within
48 hours of receipt of a timely request and shall issue a decision within 72 hours after the
hearing.

(d) A person aggrieved by a final summary action may file an appeal in accordance with the
procedures set forth in subchapter I of Chapter 5 of Title 2.

(Jan. 24, 1934, 48 Stat. 330, ch. 4, § 17; Aug. 27, 1935, 49 Stat. 900, ch. 756, § 9; Aug. 25, 1937, 50 Stat.
803, ch. 766, § 3; Apr. 26, 1950, 64 Stat. 88, ch. 106; Dec. 8, 1970, 84 Stat. 1393, Pub. L. 91-535, § 3(a);
Sept. 29, 1982, D.C. Law 4-157, §§ 9, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(5), 30 DCR
5927; Mar. 7, 1987, D.C. Law 6-217, § 11; 34 DCR 907; Sept. 11, 1993. D.C. Law 10-12, § 2(b), 40 DCR
4020; May 24, 1994, D.C. Law 10-122, § 2(h), 41 DCR 1658; Apr. 30, 1998, D.C. Law 12-97, § 2, 45 DCR
1517; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; July 18, 2008, D.C. Law 17-201, § 6(b), 55
DCR 6289.)

§ 25-826 ALCOHOLIC BEVERAGES REGULATION

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 17-201, in subsec. (a), substituted For Law 17-201, see notes 'following § 25-101.

"suspend, fine," for "suspend,".

§ 25-827. Request for suspension or revocation of license by Chief of Police.

(a) The Chief of Police may request the suspension or revocation of a license if the Chief of
Police determines that there is a correlation between increased incidents of crime within 1,000
feet of the establishment and the operation of the establishment. The determination shall be
based on objective criteria, including incident reports, arrests, and reported crime, occurring
within the preceding 18 months and within 1,000 feet of the establishment.

(b) The Chief of Police may close an establishment for up to 96 hours, subject to a hearing
and disposition by the Board under § 25-826 if he or she finds that:

(1) There is an additional imminent danger to the health and welfare of the public by not
doing so; and

(2) There is no immediately available measure to ameliorate the finding in paragraph (1)
of this subsection.

(c) The order of the Chief of Police to close an establishment under subsection (b) of this
section shall terminate upon the disposition by the Board of the matter under § 25-826.

(Jan. 24, 1934, 48 Stat. 330, ch. 4, § 17; Aug. 27, 1935, 49 Stat. 900, ch. 756, § 9; Aug. 25, 1937, 50 Stat.
803, ch. 766, § 3; Apr. 26, 1950, 64 Stat. 88, ch. 106; Dec. 8, 1970, 84 Stat. 1393, Pub. L. 91-535, § 3(a);
Sept. 29, 1982, D.C. Law 4-157, §§ 9, 15, 29 DCR 3617; Mar. 8, 1984, D.C. Law 5-51, § 2(b)(5), 30 DCR
5927; Mar. 7, 1987, D.C. Law 6-217, § 11; 34 DCR 907; Sept. 11, 1993, D.C. Law 10-12, § 2(b), 40 DCR
4020; May 24, 1994, D.C. Law 10-122, § 2(h), 41 DCR 1658; Apr. 30, 1998, D.C. Law 12-97, § 2, 45 DCR
1517; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept. 23, 2005, D.C. Law 16-20, § 2(b), 52
DCR 6575.)

Historical and Statutory Notes
Effect of Amendments Emergency Act Amendments

D.C. Law 16-20, rewrote subsec. (b) and added For temporary (90 day) amendment of section,

subsec. (c). Prior to amendment, subsec. (b) read see § 2(c) of Inaugural Celebration Extension of

'"ri" P ,. f fD1 . , . ur u Hours Public Safety Emergency Act of 2008 (D.C.

(b) The Chief of Police may close an establish- Act 17 _ 616 DeC ember 19, 2008, 56 DCR 44).
ment tor the remainder of the business day if he or

she believes that continued operation presents an Legislative History of Laws

imminent danger to the health, safety, or welfare For Law 16-20, see notes following § 25-798.
of the public".

Notes of Decisions

In general 1 Control Bd., 2011, 29 A.3d 965. Intoxicating Li-
quors ^ 106(2); Intoxicating Liquors <&=> 108.5

1 In general Court of Appeals would not consider arguments
' c ,,,. ! ., ^ii-- j. *i raised by liquor licensee for the first time in reply
Substantial evidence supported decision of Alco- kvi - * ' * „i +■ w A i i, r t> n '* i
holic Beverage Control Board to revoke alcoholic brief on appeal from Alcoholic Beverage Control
beverage license of operator of nightclub; hearing B °f? s dec^ion revoking ite liquor license, that
occurred after 17-year-old girl was shot and killed statute ' whlch allowed Chief of Pollce to request
inside club, Board heard" conflicting testimony suspension of license based on a correlation be-
about whether marijuana use and underage drink- tween operation of establishment and increased
ing occurred at club, and Board credited testimony crim e within 1,000 feet of the establishment, did
of numerous witnesses with respect to underage not provide an independent basis for suspension or
drinking, use of controlled substances, repeated revocation. Levelle, Inc. v. District of Columbia
violent incidents, and security issues at club. Alcoholic Beverage Control Bd., 2007, 924 A.2d
Aziken v. District of Columbia Alcoholic Beverage 1030. Intoxicating Liquors <s^ 108.10(2)

§ 25-828. Notice of suspension or revocation.

(a) If the Board orders the suspension or revocation of a license, the Board shall post a
notice in a conspicuous place at or near the main street entrance of the outside of the
establishment.

ALCOHOLIC BEVERAGES REGULATION § 25-830

(b) The posted notice shall state that the license has been suspended, the period of the
suspension, and that the suspension is ordered because of a violation of this title or of the
regulations promulgated under this title.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Sept 30, 2004, D.C. Law 15-187, § 101(ff), 51 DCR

6525.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 15-187 added subsec. (c). For Law 15-187, see notes following § 25-101.

§ 25-830. Civil penalties.

(a) Within 90 days after May 3, 2001, the Board shall submit proposed regulations setting
forth a schedule of civil penalties ("schedule") for violations of this title to the Council for a
60-day period of review, including Saturdays, Sundays, holidays, and periods of Council
recess. If the Council does not approve, in whole or in part, the proposed regulations by
resolution with the 60-day review period, the regulations shall be deem disapproved. The
schedule shall replace all civil penalties, except as expressly provided in this title.

(b) The schedule shall be prepared in accordance with the following provisions:

(1) The schedule shall contain 2 tiers that reflect the severity of the violation for which
the penalty is imposed:

(A) The primary tier shall apply to more severe violations, including service to minors
or violation of hours of sale or service of alcoholic beverages.

(B) The secondary tier shall apply to less severe violations, including the failure to
post required signs.

(2) A subsequent violation in the same tier, whether a violation of the same provision or
different one, shall be treated as a repeat violation for the purposes of imposing an
increased penalty; provided, that all secondary tier infractions cited by ABR A investigators
or Metropolitan Police Department Officers, during a single investigation or inspection on a
single day, shall be deemed to be one secondary tier violation for the purposes of
determining repeat violations under this section.

(c)(1) For primary tier violations, the penalties shall be no less than the following:

(A) For the first violation, no less than $1,000;

(B) For the second violation within 2 years, no less than $2,000; and

(2) A licensee who has been found in violation of no more than 3 secondary tier violations
and who is subsequently found in violation of a primary tier violation shall be penalized
according to a first primary tier violation.

(3) A licensee found in violation of a primary tier offense for the fourth time within 4
years shall have the license revoked.

(d)(1) For secondary tier violations, the penalties shall be no less than the following:

(A) For the first violation, no less than $250.

(B) For the second violation within 2 years, no less than $500.

(2) A licensee found in violation of a secondary tier violation for the fourth time within 4
years shall be penalized according to a first primary tier violation. Every subsequent
secondary tier offense within 5 years of the first violation shall be fined according to the
schedule for primary tier violations.

(e)(1) Except for an egregious violation as may be later defined by ABC rulemaking, no
licensee shall be found to be in violation of a first- time violation of § 25-781 (sales to minors),
unless the licensee has been given a written warning, or received a citation, for the violation,
or had an enforcement proceeding before the Board, during the 4 years preceding the
violation.

§ 25-830 ALCOHOLIC BEVERAGES REGULATION

(2) A warning for a first-time violation of § 25-781 shall include a description of the
violation. The Alcoholic Beverage Regulation Administration shall make available a
schedule of fines that could be imposed upon subsequent violation. Within one year of
[March 25, 2009], the Board shall submit a report on the status of the warning requirement
for § 25-781 violations, including a statement on repeat offenders and subsequent fines or
sanctions imposed. The provisions of paragraph (1) of this subsection, and the provisions of
§ 25-781 (f) shall expire one year from [March 25, 2009], unless the Board finds each of the
following:

(A) That the warning requirement was effective in correcting behavior that was the
subject of the warning for those licensees; and

(B) That the warning requirement contributed to the overall prevention of sales to
minors in the District of Columbia.

(3) (A) Within 60 days of [March 25, 2009], the Board shall issue proposed regulations for
a comprehensive warning and violation structure, which shall include recommendations on
which violations of the act or regulations shall require a warning for a first-time violation
prior to penalty.

(B) Proposed rules under this subsection shall be submitted to the Council for a
30-day period of review. The Council may approve these proposed regulations, in whole
or in part, by resolution. If the Council has not approved the regulations upon expiration
of the 30-day review period, the regulations shall be deemed disapproved.

(f) The Board or the Council may amend the schedule. An amendment by the Board shall
be submitted to the Council for its approval in accordance with subsection (a) of this section.
The Board may fine for a violation not listed on the schedule consistent with the primary tier
violation penalties set forth in subsection (c)(1) of this section.

(g) The schedule and any amendments to the schedule shall be published in the District of
Columbia Register and promulgated by the procedure adopted under § 25-2 11(e).

(h) Penalties or fines assessed under this chapter shall be credited to the General Fund of
the District of Columbia.

(May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Mar. 25, 2009, D.C. Law 17-361, § 2(d)(3), 56 DCR
1204.)

Historical and Statutory Notes

Effect of Amendments al Resolution of 2003", was approved effective De-

D.C. Law 17-361 rewrote subsec. (e) and added cember 2, 2003.
the second sentence to subsec (f). Prior to Resolution 18 _4 88 the "Egregious First Time

amendment, subsec. (e) read as follows: „ . , >,. _ T . , ' ~. %. °_. _, . L .

tl/ „ „ ' . .„ . , ,. „ . . . Sale to Minor Violation Clarification Regulations

(e) The Board may specify violations for which A , Resolution of 2010 „ was d effec .

a licensee may be given a warning before the f - T omn ' ■

issuance of a citation for a first violation." tlve June lj JU1U *
Legislative History of Laws Resolution 18-522, the "East Dupont Circle

For Law 17-361, see notes following § 25-113. Moratorium Zone Regulations Approval Resolution

References in Text °f 2010", was approved effective June 29, 2010.

The reference in subsection (e)(3)(A) to "the act" Resolution 18-540, the "Drinking and Driving

is a reference to the Alcoholic Beverage Enforce- Warning Sign Regulation Approval Resolution of

ment Amendment Act of 2008, effective March 25, 2 010", was approved effective July 13, 2010.
2009 (D.C. Law 17-361; 56 DCR 1204). F1 ,y

o i ^ - on Resolution 18-701, the "Georgetown Moratorium

Resolution 15-340, the "Alcoholic Beverage Reg- Zone R flf A PP™val **™lf™, A ° f 2010 "' was
ulation Civil Penalty Schedule Regulations Approv- approved effective December 21, 2010.

§ 25-831. Penalty for violation where no specific penalty provided; additional

penalty for failure to perform certain required acts.

Notes of Decisions
2. Sentence and punishment of the Act that are criminal in nature, how they are

Statute does not compel a criminal sanction for to be prosecuted: misdemeanors by the Corpora-
all violations of the Alcoholic Beverage Control tion Counsel, and felonies by the U.S. Attorney.
Act, but merely provides, with respect to violations

ALCOHOLIC BEVERAGES REGULATION § 25-911

Cass v. District of Columbia, 2003, 829 A.2d 480,
amended on rehearing in part. Intoxicating Li-
quors <&=> 242

§ 25-832 Prompt notice of investigative reports.

(a) ABRA shall provide a licensee with either an investigative report or a public police
incident report that may result in a show cause hearing as set forth in § 25-447 within 90
days of the date upon which the incident occurred.

(b) The requirement in subsection (a) of this section shall not apply where [:]

(1) Criminal action is being considered against the licensee or its employees; or

(2) Enforcement action is requested by the Chief of Police under § 25-827.
(Mar. 25, 2009, D.C. Law 17-361, § 2(d)(4), 56 DCR 1204.)

Historical and Statutory Notes

Legislative History of Laws

For Law 17-361, see notes following § 25-113.

Chapter 9
Taxes.

Section

25-911. Seizure and forfeiture of alcoholic bever-
ages and vehicles for which taxes have
not been paid.

§ 25-911. Seizure and forfeiture of alcoholic beverages and vehicles for which
taxes have not been paid.

(a) Notwithstanding the provisions of § 25-803, if the taxes levied and imposed on alcoholic
beverages by this chapter which have not been paid as required by this chapter, such
alcoholic beverages shall be declared contraband goods and shall be forfeited to the District in
accordance with the procedure set forth in this section. The Mayor may seize any such
alcoholic beverages wherever they are found.

(b) If the Mayor has knowledge or reason to suspect that a vehicle is carrying alcoholic
beverages or contains any alcoholic beverages in violation of the regulations contained in this
title concerning the importation of alcoholic beverages, the Mayor may stop the vehicle and
inspect it for alcoholic beverages on which the taxes levied and imposed by this chapter have
not been paid. If such alcoholic beverages are found, the alcoholic beverages and the vehicle
shall be declared contraband goods, shall be seized, and shall be forfeited to the District;
provided, that the following vehicles shall not be subject to forfeiture under this section:

(1) A vehicle used by a person as a common carrier in the transaction of business as a
common carrier, unless it appears that the owner or other person in charge of the vehicle
was a consenting party or privy to the violation on account of which the vehicle w T as seized.

(2) A vehicle that is subject to seizure and forfeiture under this section by reason of an
act committed or omission established by the owner thereof, which act was committed or
omitted by any person other than the owner while the vehicle was unlawfully in the
possession of a person other than the owner, in violation of the criminal laws of the United
States, the District, or any other state.

(c) All property which is seized under subsection (a) or (b) of this section shall be placed
under seal or removed to a place designated by the Mayor. A libel action in the name of the
District property shall be prosecuted against the property in the Superior Court of the
District of Columbia by the Corporation Counsel. Unless good cause is shown to the
contrary, the property shall be forfeited to the District.

§ 25-911 ALCOHOLIC BEVERAGES REGULATION

(d) The property shall not be subject to replevin, but shall be deemed to be in the custody
of the Mayor, subject only to the orders, decrees, and judgments of the court.

(e) Notwithstanding the provisions of this section, if the property is subject to seizure and
forfeiture on account of failure to comply with the provisions of this title and the Mayor
determines that the failure was excusable, the Mayor may return the property to the owner,

(f) If the Mayor determines that any property seized is liable to perish or become greatly
reduced in price or value by keeping the property until the completion of forfeiture
proceedings, the Mayor may:

(1) Appraise the property and return it to the owner thereof upon the payment of any
tax due under this chapter and receipt of a satisfactory bond in an amount equal to the
appraised value, which bond may be used to satisfy the final order, decree, or judgment of
the court; or

(2) If the owner neglects or refuses to pay the tax and provide the bond, sell the
property in the manner provided by the Mayor by regulation and pay the proceeds of the
sale, after deducting the reasonable costs of the seizure and sale, to the court to satisfy its
final order, decree, or judgment

(g) After the final order, decree, or judgment is made, forfeited property shall be sold in
the same manner as personal property seized for the payment of District taxes. The
proceeds of the sale shall be deposited in the General Fund of the District of Columbia. If
there is a bona fide prior lien against the forfeited property, the proceeds of the sale of the
property shall be applied in the following priority:

(1) the payment of any tax due under this chapter and all expenses incident to the
seizure, forfeiture, and sale of the property;

(2) the payment of the lien; and

(3) the remainder shall be deposited with the D.C. Treasurer; provided, that no payment
of a lien shall be made if the lienor was a consenting party or privy to the violation of this
title for which the property was seized and forfeited. To the extent necessary, liens against
forfeited property shall, on good cause shown by the lienor, be transferred from the
property to the proceeds of the sale of the property.

(Jan. 24, 1934, 48 Stat. 319, § 46, as added July 24, 1982, D.C. Law 4-131, § 303, 29 DCR 2418; May 3,
2001, D.C. Law 13-298, § 101, 48 DCR 2959: Oct. 26, 2001, D.C. Law 14-42, § 6(f), 48 DCR 7612.)

Historical and Statutory Notes

Effect of Amendments Act of 2001 (D.C. Act 14-108, August 3, 2001, 48

D.C. Law 14-42 made nonsubstantive changes in DCR 7622).
pars. (1), (2), and (3) of subsec. (g). Legislative History of Laws

Emergency Act Amendments ^ T A A An , £ ., «nrmn

^ , ,nn j ' \ j ± * 4.- For Law 14-42, see notes following § 25-120.

For temporary (90 day) amendment of section, ' &

see § 6(f) of Technical Amendments Emergency

Chapter 10
Limitations on Consumers.

Section Section

25-1001. Drinking of alcoholic beverage in public 25-1004. Prohibition on use of watercraft under
place prohibited; intoxication prohibit- certain conditions,

ed. 25-1008. Prima facie evidence of intoxication.

25-1002. Purchase, possession or consumption by 25-1009. Operation of locomotive, streetcar, ele-
persons under 21; misrepresentation vator, or horse-drawn vehicle by in-

of age; penalties. toxicated person prohibited.

ALCOHOLIC BEVERAGES REGULATION

§ 25-1002

§ 25-1001. Drinking of alcoholic beverage in public place prohibited; intoxi-
cation prohibited.

Prior Codifications

1981 Ed., § 25-128.
1973 Ed., § 25-128.

Historical and Statutory Notes

Notes of Decisions

Relation to other crimes 5.5

3. Warrantless arrest or search

Officer had a reasonable suspicion supported by
articulable facts to make a Terry stop in order to
investigate whether or not defendant was drinking
alcoholic beverages in a public place in violation of
District of Columbia law; about 20 people were
outside in residential neighborhood, there ap-
peared to be a party atmosphere, defendant was
carrying large white styrofoam cup in his hand and
brown paper bag under his arm, when five or six
officers exited two cars the group began to dis-
perse in other direction from officers, and defen-
dant voluntarily stated to officer "I ain't doing
nothing. I'm just drinking." U.S. v. Jones,
C.A.D.C.2009, 584 F.3d 1083, 388 U.S.App.D.C.
251, certiorari denied 130 S.Ct. 2081, 176 L.Ed.2d
428, post-conviction relief denied 786 F.Supp.2d
378. Arrest <£=> 60.2(5)

Police had probable cause to arrest defendant
for violating the open container law in their pres-
ence, based on his proximity as a front seat pas-
senger in an automobile to an open can of malt
liquor lying next to him in plain sight on the center
console of the vehicle. Perkins v. U.S., 2007, 936
A.2d303. Automobiles^ 349(2.1)

5.5. Relation to other crimes

Former federal prisoners did not by misconduct
or neglect cause or bring about their own first
degree murder prosecutions, or accessories to first

degree murder prosecutions, and thus were not
barred from certificate of innocence under Unjust
Conviction Act, by being drunk in public, driving
after consuming large quantity of alcohol, conceal-
ment of unused knives, and reliance, on Fifth
Amendment rights to silence, since that conduct
was unrelated to actual crime charged. Eastridge
v. U.S., 2009, 602 F.Supp.2d 66, affirmed 604 F.3d
653, 390 U.S.App.D.C. 345. United States <£=> 77

8. Sufficiency of evidence

Evidence was sufficient to support conviction of
possession of an open container of alcohol in a
vehicle (PQCA-V), even in the absence of a chemi-
cal test of liquid in glass jar that allegedly con-
tained alcohol, where police officer observed and
smelled liquid and recognized, based on his experi-
ence, distinctive smell of vodka emanating from
clear liquid inside glass jar found next to defen-
dant, smell of alcohol emanated from defendant, as
well as from car in which jar was located, and
defendant, who was asleep in front seat of vehicle
parked in parking lot, appeared to be intoxicated
at time jar was found next to her in car. Derosi-
ers v. District of Columbia, 2011, 19 A.3d 796.
Automobiles ©=> 355(1)

Officer's observation of bottle of cognac in mo-
torist's vehicle, with the seal removed and with
partial consumption of its contents, provided prob-
able cause to arrest motorist for possession of an
open container of alcohol (POCA). Bean v. U.S.,
2011, 17 A,3d 635. Automobiles <^> 349(2.1)

§ 25-1002. Purchase, possession or consumption by persons under 21; misrep-
resentation of age; penalties.

(a) No person who is under 21 years of age shall purchase, attempt to purchase, possess, or
drink an alcoholic beverage in the District, except as provided under subchapter IX of
Chapter 7.

(b)(1) No person shall falsely represent his or her age, or possess or present as proof of
age an identification document which is in any way fraudulent, for the purpose of purchasing,
possessing, or drinking an alcoholic beverage in the District.

(2) No person shall present a fraudulent identification document for the purpose of
entering an establishment possessing an on-premises retailer's license, an Arena C/X
license, or a temporary license.

(3) For the purpose of determining valid representation of age, each person shall be
required to present to the establishment owner or representative at least one form of valid
identification, which shall have been issued by an agency of government (local, state,
federal, or foreign) and shall contain the name, date of birth, signature, and photograph of
the individual.

§ 25-1002 ALCOHOLIC BEVERAGES REGULATION

(c)(1) Except as provided in paragraph (4)(D) of this subsection, any person who violates
any provision of this section shall be guilty of a misdemeanor and, upon conviction, shall be
subject to a fine and suspension of driving privileges as follows:

(A) Upon the first violation, a fine of not more than $300 and suspension of driving
privileges in the District for 90 consecutive days;

(B) Upon the second violation, a fine of not more than $600 and suspension of driving
privileges in the District for 180 days; and

(C) Upon the third and each subsequent violation, a fine of not more than $1,000 and
suspension of driving privileges in the District for one year.

(2) In lieu of proceeding to trial or disposition under paragraph (1) of this subsection, the
Mayor shall offer persons who are arrested, or criminally charged by information, for a
first or second violation of this section, the option of completing a diversion program
authorized and approved by the Mayor. The Mayor shall determine the content of the
diversion program, which may include community service and alcohol awareness and
education. If the person rejects enrollment in, or fails to comply with the requirements of,
or fails to complete within 6 months, the diversion program, he or she may continue to be
prosecuted in accordance with paragraph (1) of this section. The Mayor, may, at his
discretion, decline to offer diversion to any person who has previously been convicted of,
any felony, misdemeanor, or other criminal offense.

(3) As a condition to acceptance into a diversion program, the Mayor may request that
the person agree to pay the District, or its agents, a reasonable fee, as established by rule,
for the costs to the District of the person's participation in the program; provided, that:

(A) The fee shall not unreasonably discourage persons from entering the diversion
program; and

(B) The Mayor may reduce or waive the fee if the Mayor finds that the person is
indigent.

(4)(A) Upon the expiration of 6 months following the date of a conviction or a dismissal of
a proceeding, or upon the expiration of 6 months following the date of arrest if no
information was filed, any person who was arrested for, or criminally charged by informa-
tion with, any offense under this section may petition the court for an order expunging from
the official records all records relating to the arrest, information, trial, conviction, or
dismissal of the person; provided, that a nonpublic record shall be retained by the court
and the Mayor solely for the purposes of conducting a criminal record check for persons
applying for a position as a law enforcement officer or determining whether a person has
previously received an expungement under this subsection.

(B) The court shall grant the petition described in subparagraph (A) of this paragraph
if the petitioner has no pending charges for and has not been convicted of, any other
felony, misdemeanor, or other criminal offense and if any fine imposed as a result of a
conviction under this section has been paid; provided, that the court may grant the
petition described in subparagraph (A) of this paragraph if, other than a conviction for a
misdemeanor under this section, the petitioner has no pending charges for, and has not
been convicted of, any felony, misdemeanor, or other criminal offense.

(C) Except as provided by this subsection, the effect of an expungement order shall be
to lawfully restore the person receiving the expungement to the status he or she occupied
before the arrest or information described in subparagraph (A) of this paragraph. No
person for whom an expungement order permitted by this subsection has been entered
may be held thereafter, under any provision of law, to be guilty of perjury or otherwise
giving a false statement by failing to recite or acknowledge such arrest, information, trial,
conviction, or dismissal for which the order permitted by this paragraph has been
entered. The expungement of such records shall not relieve the person of the obligation
to disclose such arrest, information, trial, conviction, or dismissal in response to a direct
questionnaire or application for a position as a law enforcement officer.

(D) No person under the age of 21 shall be criminally charged with the offense of
possession or drinking an alcoholic beverage under this section, but shall be subject to
civil penalties under subsection (e) of this section.

(6) Failure to pay the fines set forth in paragraph (1) of this subsection shall result in
imprisonment for a period not exceeding 30 days.

84'

ALCOHOLIC BEVERAGES REGULATION § 25-1002

(7) The Metropolitan Police Department may enforce provisions of this section by issuing
to a person alleged to have violated this section a citation under § 23-1 110(b)(1). The
person shall not be eligible to forfeit collateral.
.(d) Repealed.

(e)(1) In lieu of criminal prosecution as provided in subsection (c) of this section, a person
who violates any provision of this section shall be subject to the following civil penalties:

(A) Upon the first violation, a fine of not more than $300 and the suspension of driving
privileges in the District for 90 consecutive days;

(B) Upon the second violation, a fine of not more than $600 and the suspension of
driving privileges in the District for 180 days; and

(C) Upon the third or subsequent violation, a fine of not more than $1,000 and the
suspension of driving privileges in the District for one year.

(2) ABRA inspectors or officers of the Metropolitan Police Department may enforce the
provisions of this subsection by issuing a notice of civil infraction for a violation of
subsections (a) and (b) of this section in accordance with Chapter 18 of Title 2. A violation
of this subsection shall be adjudicated under Chapter 18 of Title 2.

(3)(A) In lieu of or in addition to the civil penalties provided under paragraph (1) of this
subsection, as a civil penalty, the Mayor may require any person who violates any provision
of this section to complete a diversion program authorized and approved by the Mayor.
The Mayor shall determine the content of the diversion program, which may include
community service, and alcohol awareness and education.

(B) As a condition to acceptance into a diversion program, the Mayor may request that
the person agree to pay the District, or its agents, a reasonable fee, as established by
rule, for the costs to the District of the person's participation in the program; provided,
that:

(i) The fee shall not unreasonably discourage persons from entering the diversion
program; and

(ii) The Mayor may reduce or waive the fee if the Mayor finds that the person is
indigent.

(Jan. 24, 1934, 48 Stat. 335, ch. 4, § 30; Feb. 24, 1987, D.C. Law 6-178, § 2(c), 33 DCR-7654; Sept. 11,
1993, D.C. Law 10-12, § 2(d), 40 DCR 4020; May 24, 1994, D.C. Law 10-122, § 2(j), 41 DCR 1658; Apr.
9, 1997, D.C. Law 11-187, § 2, 43 DCR 4515; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct.
26, 2001, D.C. Law 14-42, § 6(g), 48 DCR 7612; Sept. 30, 2004, D.C. Law 15-187, § 101 (gg), 51 DCR
6525; Mar. 16, 2005, D.C. Law 15-220, § 2, 51 DCR 9603; Mar. 25, 2009, D.C. Law 17-353, § 189, 56 DCR
1117.)

Historical and Statutory Notes

Effect of Amendments "(d) In addition to the penalties provided in

D.C. Law 14-42 validated the previously made subsection (c) of this section, any person who

technical correction in subsec. (e)(2). violates any provision of this section shall be sub-

D.C. Law 15-187 designated the existing text of J ect to the follo ™g penalties:

subsec. (c) as subsection (c)(1); and added par. (2) "(1) Upon the first violation, his or her driving

of subsec. (c). privileges in the District shall be suspended for 90

D.C. Law 15-220 rewrote subsecs. (c) and (e), consecutive days;

and repealed subsec. (d), which had read: "(2) Upon the second violation, his or her driv-

"(c)(1) Any person under 21 years of age who ing privileges in the District shall be suspended for

falsely represents his or her age for the purpose of 18U days ' ancl

purchasing, possessing, or drinking an alcoholic "(3) Upon the third violation and each subse-

beverage shall be deemed guilty of a misdemeanor quent violation, his or her driving privileges in the

and, upon conviction, shall be fined for each of- District shall be suspended for one year."

fense not more than $300; provided, that in default "(e)(1) As an alternative sanction to the misde-

in the payment of the fine, the person shall be meanor penalties provided in subsection (c) of this

imprisoned for a period not exceeding 30 days. section, a person who violates subsection (a) or (b)

"(2) Officers of the Metropolitan Police Depart- of this section shall be subject to the following civil

ment may enforce provisions of this section by penalties.

issuing to a person alleged to have violated this "(A) Upon the first violation, a penalty of $300;

section a citation under § 23-1110(b)(l). The per- "(B) Upon the second violation, a penalty of

son shall not be eligible to forfeit collateral. $600; and

§ 25-1002

ALCOHOLIC BEVERAGES REGULATION

"(C) Upon the third and subsequent violations, a
penalty of $1,000 and the suspension of his or her
driving privileges in the District for one year.

"(2) ABRA inspectors or officers of the Metro-
politan Police Department may enforce the provi-
sions of this subsection by issuing a notice of civil
infraction for a violation of subsections (a) or (b) of
this section in accordance with Chapter 18 of Title
2. A violation of this subsection shall be adjudicat-
ed under Chapter 18 of Title 2."

D.C. Law 17-353, in subsec. (c)(4)(C), substitut-
ed "this paragraph" for "paragraph (4) of this
paragraph".
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 6(g) of Technical Amendments Emergency
Act of 2001 (D.C. Act 14-108, August 3, 2001, 48
DCR 7622).

For temporary (90 day) amendment of section,
see § 2 of Alcoholic Beverage Penalty Emergency
Act of 2004 (D.C. Act 15-493, August 2, 2004, 51
DCR 8787).

For temporary (90 day) amendment of section,
see § 2 of Alcoholic Beverage Penalty Congres-
sional Review Emergency Amendment Act of 2004
(D.C. Act 15-625, November 30, 2004, 52 DCR
1127).

For temporary (90 day) amendment of section,
see § 2 of Alcoholic Beverage Penalty Congres-
sional Review Emergency Act of 2005 (D.C. Act
16-34, February 17, 2005, 52 DCR 3020).
Legislative History of Laws

For Law 14-42, see notes following § 25-120.

For Law 15-187, see notes following § 25-101.

Law 15-220, the "Alcoholic Beverage Penalty
Act of 2004", was introduced in Council and as-
signed Bill No. 15-823, which was referred to the
Committee on Consumer and Regulatory Affairs.
The Bill was adopted on first and second readings
on July 13, 2004, and September 21, 2004, respec-
tively. Signed by the Mayor on October 4, 2004, it
was assigned Act No. 15-529 and transmitted to
both Houses of Congress for its review. D.C. Law
15-220 became effective on March 16, 2005.

For Law 17-353, see notes following § 25-113.

Notes of Decisions

1. Penalty under prior law

The suspension of driving privileges for viola-
tions of the Alcoholic Beverage Control Act by
underage persons who possess or consume alcohol,
or who lie about their age in order to do so, is a
civil, rather than a criminal, sanction. Cass v.
District of Columbia, 2003, 829 A2d 480, amended
on rehearing in part. Automobiles «5» 144.1(1)

The possession of an alcoholic beverage by a
person under 21 is punishable only by a civil fine

and suspension of driving privileges. Cass v. Dis-
trict of Columbia, 2003, 829 A2d 480, amended on
rehearing in part. Automobiles <^ 144.1(1); In-
toxicating Liquors <©» 139

Possession of alcohol by a person under the age
of 21, in violation of the Alcoholic Beverage Con-
trol (ABC) Act, was not a criminal offense; con-
duct was punishable only by a civil fine and sus-
pension of driving privileges. D.C. v. Agin, et al.,
132 WLR 1429 (Super. Ct. 2004).

§ 25-1004. Prohibition on use of watercraft under certain conditions.

(a) No person shall operate or be in physical control of any vessel or watercraft, including
water skis, aquaplane, sailboard, personal watercraft, or similar device in the District, if:

(1) The person's alcohol concentration is 0.08 grams or more either per 100 milliliters of
blood or per 210 liters of breath or is 0.10 grams or more per 100 milliliters of urine; or

(2) [Repealed].

(3) The person is under the influence of intoxicating liquor or any controlled substance or
a combination thereof.

(b) A person under 21 years of age shall not operate or be in physical control of any vessel
or watercraft, including water skis, aquaplane, sailboard, personal watercraft, or a similar
device in the District if the person's blood, breath, or urine contains any measurable amount
of alcohol.

(c) No person shall operate or be in physical control of any vessel or watercraft while the
person is impaired by the consumption of intoxicating liquor.

(d) For the purposes of this section and §§ 25-1005 through 25-1007, the term "controlled
substance" has the same meaning as set forth in § 48-901.02(4).

(e) The Harbor Master shall be directly responsible for enforcing this section and shall
ensure that the public is made aware of the District's aggressive enforcement policy through
a continual public awareness campaign.

(Apr. 9, 1997, D.C. Law 11-248, §§ 2, 7, 44 DCR 1242; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR
2959; Mar. 2, 2007, D.C. Law 16-195, § 3(a), 53 DCR 8675.)

ALCOHOLIC BEVERAGES REGULATION

§ 25-1008

Historical and
Effect of Amendments

D.C. Law 16-195, in subsec. (a), rewrote par. (1)
and repealed par. (2), which had read as follows:

"(1) The person's blood contains (A) .08% or
more, by weight, of alcohol, or (B) .48 micrograms
or more of alcohol are contained in one milliliter of
the person's breath, consisting of substantially al-
veolar air;

"(2) The person's urine contains .13% or more,
by weight, of alcohol; or"

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 3(a) of Anti-Drunk Driving Clarification
Emergency Amendment Act of 2006 (D.C. Act
16-469, July 31, 2006, 53 DCR 6764).

For temporary (90 day) amendment of section,
see § 3(a) of Anti-Drunk Driving Clarification Sec-
ond Congressional Review Emergency Amend-

Statutory Notes

ment Act of 2006 (D.C. Act 16-518, October 27,
2006, 53 DCR 9104).

For temporary (90 day) amendment of section,
see § 3(a) of Anti-Drunk Driving Clarification
Congressional Review Emergency Amendment Act
of 2007 (D.C. Act 17-6, January 16, 2007, 54 DCR
1452).
Legislative History of Laws

Law 16-195, the "Anti-Drunk Driving Clarifica-
tion Amendment Act of 2006", was introduced in
Council and assigned Bill No. 16^63, which was
referred to the Committee on Public Works and
Environment. The Bill was adopted on first and
second readings on July 11, 2006, and October 3,
2006, respectively. Signed by the Mayor on Octo-
ber 18, 2006, it was assigned Act No. 16^88 and
transmitted to both Houses of Congress for its
review. D.C. Law 16-195 became effective on
March 2, 2007.

§ 25-1008. Prima facie evidence of intoxication.

(a) If a person is tried in any court of competent jurisdiction, within the District for
operating a vessel or watercraft in violation of § 25-1004 or manslaughter committed in the
operation of a vessel or watercraft in violation of § 22-2105, and in the course of the trial
there is received, based upon a chemical test, evidence of alcohol in the defendant's blood,
urine, or breath, such evidence:

(1) Shall, if at the time of testing, defendant's alcohol concentration was 0.05 grams or
less per 100 milliliters of blood or per 210 liters of breath or 0.06 grams or less per 100
milliliters of urine, establish a rebuttable presumption that the defendant was not, at the
time, under the influence of intoxicating liquor.

(2) Shall not, if at the time of testing, defendant's alcohol concentration was more than
0.05 grams per 100 milliliters of blood or per 210 liters of breath or more than 0.06 grams
per 100 milliliters of urine, but less than 0.08 grams per 100 milliliters of blood or per 210
liters of breath or less than 0.10 grams per 100 milliliters of urine, establish a presumption
that the defendant was or was not, at the time, under the influence of intoxicating liquor,
but it may be considered with other competent evidence in determining whether the
defendant was under the influence of intoxicating liquor.

(Apr. 9, 1997, D.C. Law 11-248, § 6, 44 DCR 1242; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959;
Oct. 26, 2001, D.C. Law 14-42, § 6(h), 48 DCR 7612; Mar. 2, 2007, D.C. Law 16-195, § 3(b), 53 DCR

8675.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 14-42, in subsec. (a)(2), inserted a
comma after "test".

D.C. Law 16-195, in the introductory language,
substituted "and in the course of the trial there is
received, based upon a chemical teat, evidence of
alcohol in the defendant's blood, urine, or breath,
such evidence:" for "the following standards shall
apply to competent evidence based upon a chemi-
cal test:"; and rewrote pars. (1) and (2), which had
read as follows:

"(1) If (A) at the time of operation, the defen-
dant's blood contained less than .05% by weight, of
alcohol, (B) defendant's urine contained less than
.06%, by weight, of alcohol, or (C) at the time of
the test, less than .24 micrograms of alcohol were
contained in one milliliter of his or her breath,

consisting of substantially alveolar air, this evi-
dence shall not establish a presumption that the
defendant was or was not, at the time, under the
influence of intoxicating liquor, but it may be con-
sidered with other competent evidence in deter-
mining whether the defendant was under the influ-
ence of intoxicating liquor.

"(2) If (A) at the time of operation, the defen-
dant's blood contained .05% or more, by weight of
alcohol, (B) defendant's urine contained .06% or
more, by weight of alcohol, or (C) at the time of
the test, .24 micrograms or more of alcohol were
contained in one milliliter of his or her breath,
consisting of substantially alveolar air, this evi-
dence shall constitute prima facie proof that the
defendant was, at the time, under the influence of

§ 25-1008 ALCOHOLIC BEVERAGES REGULATION

intoxicating liquor or the defendant's ability to For temporary (90 day) amendment of section,

operate a vessel was impaired by the consumption see § 3(b) of Anti-Drunk Driving Clarification Sec-

of intoxicating liquor." ond Congressional Review Emergency Amend-

* A \ ment Act of 2006 (D.C. Act 16-518, October 27,

Emergency Act Amendments 2006 53 DCR 9104)

For temporary (90 day) amendment of section, For temporary (90 day) amendment of section,

see § 6(h) of Technical Amendments Emergency see § 3(b) of Anti-Drunk Driving Clarification

Act of 2001 (D.C. Act 14-108, August 3, 2001, 48 Congressional Review Emergency Amendment Act

DCR 7622). of 2007 (D.C. Act 17-6, January "l6, 2007, 54 DCR

For temporary (90 day) amendment of section, 14d^).

see § 3(b) of Anti-Drunk Driving Clarification Legislative History of Laws

Emergency Amendment Act of 2006 (D.C. Act For Law 14^2, see notes following § 25-120.

16-469, July 31, 2006, 53 DCR 6764). For Law 16-195, see notes following § 25-1004.

§ 25-1009. Operation of locomotive, streetcar, elevator, or horse-drawn vehicle
by intoxicated person prohibited.

(a) No person shall be intoxicated while in charge of or operating a locomotive; acting as a
conductor or brakeman of a car or train of cars; or operating a streetcar, or horse-drawn
vehicle.

(b) A person violating the provisions of this section shall be guilty of a misdemeanor and,
upon conviction, shall be punished by a fine of not more than $300, or by imprisonment for not
longer than 3 months, or both.

(c) Nothing herein contained shall be construed as repealing or modifying §§ 50-1401.01,
50-1401.02, 50-1403.01, 50-2201.03 through 50-2201,05, and 50-2201.27.

(d) Civil penalties and fees may be imposed as alternative sanctions for any violation of this
section in accordance with the procedures under Chapter 18 of Title 2.

(Jan. 24, 1934, 48 Stat. 333, ch. 4, § 27; Oct, 5, 1985, D.C. Law 6-12, § 455(a), 32 DCR 4450; Apr. 9, 1997,
D.C. Law 11-248, § 8(a), 44 DCR 1242; May 3, 2001, D.C. Law 13-298, § 101, 48 DCR 2959; Oct. 26,
2001, D.C. Law 14-42, § 6(i), 48 DCR 7612.)

Historical and Statutory Notes

Effect of Amendments Act of 2001 (D.C. Act 14-108, August 3, 2001, 48

D.C. Law 14-42 validated the previously made DCR 7622).

technical correction in subsec. (c). T . , ,. „. . fr

_ , Legislative History of Laws

Emergency Act Amendments _ r . . ._ <.->■>.

For temporary (90 day) amendment of section, For Law 14 " 42 ' see notes followm g & 25 "120.
see § 6(i) of Technical Amendments Emergency

TITLE 26

BANKS AND OTHER FINANCIAL INSTITUTIONS.

Chapter Section

1. Banking Institutions in General. 26-108

1A. Automated Teller Machines 26-131.01

2. Building Associations. ......... 26-201

3. Check Cashers 26-301

4A. Community Development by Financial institutions. 26-431.01

5A. Data Match Requirements for Financial Institution 26-531

5B. Administration of the Banking Code 26-551 .01

6. Special Account for Office of Banking and Financial Institutions [Re-

pealed] 26-602

6A. International Banking 26-631

7. Interstate Banking and Branching 26-701

8. Joint Accounts; Adverse Claimants; Trust Accounts, ... 26-801

8A. Merchant Banks 26-831 .01

9. Money Lenders; Licenses 26-901

1 0. Money Transmissions 26-1027

1 1 . Mortgage Lenders and Brokers 26-1 1 01

1 1 A. Home Loan Protection 26-1 1 51 .01

12. Savings and Loan Acquisition. ..... 26-1217

13. Trust, Loan, Mortgage, Safe Deposit and Title Corporations 26-1309

14. Universal Bank Certification. . .-.'. 26-1401.01

Chapter 1
Banking Institutions in General.

Section

26-108. Making or repeating false statements.
[Repealed]

§ 26-108. Making or repeating false statements. [Repealed]

(Mar. 4, 1933, 47 Stat. 1567, ch. 274, § 7; Apr. 29, 2004, D.C. Law 15-154, § 8, 50 DCR 10996.)

Historical and Statutory Notes

Legislative History of Laws ber 7, 2003, and November 4, 2003, respectively.

Law 15-154, the "Elimination of Outdated Signed by the Mayor on November 25, 2003, it was

Crimes Amendment Act of 2003", was introduced assigned Act No. 15-255 and transmitted to both

in Council and assigned Bill No. 15-79, which was Houses of Congress for its review. D.C. Law

referred to Committee on the Judiciary. The Bill 15 ^ 154 became effective on April 29 , 2004.
was adopted on first and second readings on Octo-

Chapter 1A
Automated Teller Machines

Section

26-131.01.

Short title.

26-131.05.

26-131.02.

Definitions.

26-131.03.

Establishment of an automated teller
machine or point-of-sale terminal.

26-131.06.

26-131.04.

Satellite device or point-of-sale termi-
nal.

26-131.07.

Evaluation of automated teller ma-
chine safety.

Lighting of automated teller machine
area.

Automated teller machine surcharge
disclosure.

§ 26-108

Repealed

Section

26-131.08.

26-131.09.

BANKS AND OTHER FINANCIAL INSTITUTIONS

Point-of-sale terminal surcharge dis-
closure.

Complaints against an operator of an
automated teller machine.

Section

26-131.10.

26-131.11.
26-131.12.
26-131.13.

Registration of automated teller ma-
chines.

Record keeping requirements.

Penalties.

Authority of Commissioner to issue
rules and regulations.

§ 26-131.01. Short title.

This chapter may be cited as the "Automated Teller Machine Act of 2000".
(June 9, 2001, D.C. Law 13-308, § 501, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

Law 13-308, the "21st Century Financial Mod-
ernization Act of 2000", was introduced in Council
and assigned Bill No. 13-867, w 7 hich was referred
to the Committee on Economic Development. The
Bill was adopted on first and second readings on

November 8, 2000, and December 19, 2000, respec-
tively. Signed by the Mayor on January 26, 2001,
it was assigned Act No. 13-597 and transmitted to
both Houses of Congress for its review. D.C. Law
13-308 became effective on June 9, 2001.

§ 26-131.02. Definitions.

For the purposes of this chapter, the term:

(1) "Access area" means a paved walkway or sidewalk which is within 50 feet of an
automated teller machine. The term "access area" shall not include publicly maintained
walkways, sidewalks, or roads.

(2) "Access device" shall have the same meaning as set forth in Federal Reserve System
Regulation E, 12 C.F.R. Part 205.

(3) "Automated teller machine" means a stationary or mobile unattended device at which
banking transactions, including deposits, withdrawals, or transfers, may be conducted. The
term shall include satellite devices and any electronic information-processing device located
in the District which accepts or dispenses cash in connection with a credit, deposit, or
convenience account. The term shall not include a device which is used solely to facilitate a
check guarantee or check authorization or which is used in connection with the acceptance
or dispensing of cash on a person-to-person basis, such as by a store cashier.

(4) "Bank" shall have the same meaning as set forth in § 26-551.02(3).

(5) "Candlefoot power" means the light intensity of candles on a horizontal plane at 36
inches above ground level and 5 feet in front of the area to be measured,

(6) "Commissioner" shall have the same meaning as set forth in § 26-551.02(7).

(7) "Control" means the authority to determine how, when, and by whom an access area,
defined parking area, or automated teller machine is to be used and how the access area,
defined parking area, or automated teller machine is to be maintained, lighted, and
landscaped.

(8) "Customer" means a natural person to whom an access device has been issued for
personal, family, or household use.

(9) "Defined parking area" means the portion of a parking area open for customer
parking which is: (A) contiguous to an access area; and (B) regularly, principally, and
lawfully used for parking, standing, or stopping by persons conducting automated teller
machine transactions during hours of darkness. The term "defined parking area" shall not
include a parking area which is not open or regularly used for parking by persons
conducting automated teller machine transactions during hours of darkness. A parking area
shall not be considered open if it is physically closed to access or if conspicuous signs
indicate that it is closed. If a multiple level parking area would otherwise be considered a
defined parking area under the definition above, only the single parking level deemed by
the operator of the automated teller machine to be the most directly accessible to the users
of the automated teller machine shall be considered a defined parking area.

(10) "District" means the District of Columbia.

(11) "District bank" shall have the same meaning as set forth in § 26-551.02(12).

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-131.02

(12) "District credit union" shall have the same meaning as set forth in § 26-551.02(13).

(13) "District of Columbia Banking Code" shall have the same meaning as set forth in
§ 26-551.02(14).

(14) "Federal credit union" means a credit union which has its principal office in the
District and is chartered or organized as a federal credit union under the laws of the
United States.

(15) "Financial institution" shall have the same meaning as set forth in § 26-551.02(18).

(16) "Hours of darkness" means the period that commences 30 minutes after sunset and
ends 30 minutes before sunrise.

(17) "Network" means one or more financial institutions or other persons that:

(A) Own and operate one or more network of satellite devices or point-of-sale
terminals; or

(B) Provide communications or processing services to one or more automated teller
machines, point-of-sale terminals, or similar retail electronic banking facilities located in
the District.

(18) "Operator" means, with respect to an automated teller machine or a point-of-sale
terminal, the person who imposes the fee on, or receives the fee from, a customer using the
automated teller machine or point-of-sale terminal.

(19) "Out-of-state" means a state other than the District or any foreign country.

(20) "Out-of-state bank" means a bank that is chartered out-of-state and that is not
chartered by the District.

(21) "Out-of-state credit union" means a credit union that is chartered out-of-state and
that is not chartered by the District.

(22) "Person" shall have the same meaning as set forth in § 26-551.02(21).

(23) "Point-of-sale terminal" means a device located in a business establishment that is
used for the purchase of a good or service where a personal identification number is
required and where sales transactions can be charged directly to the buyer's deposit, loan,
or credit account, but at which deposit transactions cannot be conducted. The term "point-
of-sale terminal" shall not include an access device.

(24) "Satellite device" means an automated teller machine of a bank or credit union
which is not located at a physical office of the bank or credit union.

(25) "Surcharge" means a charge, or portion of a charge, imposed by the operator of an
automated teller machine or point-of-sale terminal for use of the automated teller machine
or point-of-sale terminal.

(June 9, 2001, D.C. Law 13-308, § 502, 48 DCR 3244; Oct. 19, 2002, D.C. Law 14-213, § 18(b), 49 DCR
8140; June 11, 2004, D.C. Law 15-166, § 2(1), 51 DCR 2817.)

Historical and Statutory Notes
Effect of Amendments Law 14-213, the "Technical Amendments Act of

D.C. Law 14-213, in par. (6), substituted "De- 2002 "' was introduced in Council and assigned Bill

partment of Banking and Financial Institutions" ^^^^Tii^ 6 "^ ^ ^Ff*^
1e u-n, , , e r f i ■ » of the Whole. The Bill was adopted on first and

tor Department of Banking . second ^^ ^ June ^ 20Q2> ^ July 2? 2002?

D.C. Law 15-166, in par. (3), substituted "con- respectively. Signed by the Mayor on July 26,
ducted" for "conduced"; and rewrote par. (6) 2002, it was assigned Act No. 14-459 and transmit-
which had read as follows: ted to both Houses of Congress for its review.

iiU ., tn • • , , u « - • o D.C. Law 14-213 became effective on October 19,

(6) Commissioner means the Commissioner of ^^ '

the Department of Banking and Financial Institu- T " „ ^ nn , tt „ ,._ . „„. . ,„

x- n Law 15-166, the Consolidation of Financial Ser-

vices Amendment Act of 2004", was introduced in
Emergency Act Amendments Council and assigned Bill No. 15-518, which was

For temporary (90 day) amendment of section, referred to the Committee on Consumer and Reg-
see § 2(1) of Consolidation of Financial Services ulatory Affairs. The Bill was adopted on first and
Emergency Amendment Act of 2004 (D.C. Act second readings on January 6, 2004, and February
15-381, February 27. 2004, 51 DCR 2653). 3 > 2004 > respectively. Signed by the Mayor on

February 27, 2004, it was assigned Act No. 15-385
Legislative History of Laws and transmitted to both Houses of Congress for its

For Law 13-308, see notes following review. D.C. Law 15-166 became effective on
§ 26-131.01. June 11, 2004.

§ 26-131.03 BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-131.03. Establishment of an automated teller machine or point-of-sale
terminal.

(a) A District bank, federal bank, District credit union, or federal credit union may
establish in the District, and operate on a transaction fee basis, an automated teller machine.
A District bank or a District credit union may establish and operate outside of the District an
automated teller machine.

(b) An out-of-state bank that maintains a branch in the District or an out-of-state credit
union that maintains a subsidiary office in the District may establish and operate on a
transaction fee basis an automated teller machine in the District.

(c) A District bank, federal bank, out-of-state bank, District credit union, federal credit
union, out-of-state credit union, or other person may establish and operate a point-of-sale
terminal in the District.

(June 9, 2001, D.C. Law 13-308, § 503, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.04. Satellite device or point-of-sale terminal.

(a) A District bank, federal bank, out-of-state bank, District credit union, federal credit
union, or out-of-state credit union which has established a satellite device or point-of-sale
terminal in the District shall make the satellite device or point-of-sale terminal available on a
nondiscriminatory basis for use by any other bank or credit union; provided, the establishing
bank or credit union may require the other bank or credit union to pay a non-discriminatory
and reasonably proportionate share of all acquisition, installation, and operating costs for the
satellite device or point-of-sale terminal. The satellite device or point-of-sale terminal shall
identify with equal prominence all of the banks, credit unions, or networks which use the
satellite device or point-of-sale terminal.

(b) A District bank, federal bank, out-of-state bank, District credit union, federal credit
union, or out-of-state credit union which has established in the District an automated teller
machine which is not a satellite device may permit any other bank or credit union to use the
automated teller machine; provided, that if such permission is granted:

(1)(A) The automated teller machine which is not a satellite device shall be made

available on a nondiscriminatory basis for use by any other bank or credit union; and

(B) The establishing bank or credit union may require a payment by the other bank or

credit union of a nondiscriminatory and reasonably proportionate share of all acquisition,

installation, and operating costs; and

(2) The automated teller machine shall identify with equal prominence all of the banks,
credit unions, and networks which use the automated teller machine.

(c) For the purposes of subsections (a) and (b) of this subsection, the proportionality of the
charge shall be based on the number of transactions processed at the satellite device or point-
of-sale terminal.

(June 9, 2001, D.C. Law 13-308, § 504, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.05. Evaluation of automated teller machine safety.

(a) An operator of, or person controlling, an automated teller machine shall adopt proce-
dures for evaluating the safety of an automated teller machine. The procedures shall include a
consideration of the following:

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-131 .07

(1) The extent to which the lighting for the automated teller machine complies, or will
comply, with the standards required by this chapter;

(2) The presence of obstructions, including landscaping and vegetation, in the area of the
automated teller machine, the access area, and the defined parking area; and

(3) The incidence of crimes of violence in the immediate neighborhood of the automated
teller machine, as reflected in the records of the local law enforcement agency.

(b) This chapter shall not impose a duty to relocate or modify an automated teller machine
upon the occurrence of a particular event or circumstance.
(June 9, 2001, D.C. Law 13-308, § 505, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.06. Lighting of automated teller machine area.

(a) A person who controls an access area or a defined parking area shall provide lighting
for the access area or defined parking area, and the operator or person controlling an
automated teller machine shall provide lighting for the automated teller machine and the
exterior of an enclosed automated teller machine installation, during hours of darkness if the
automated teller machine is open and operating, according to the following standards:

(1) There shall be a minimum of 10 candlefoot power at the face of the automated teller
machine extending unobstructed outward 5 feet.

(2) There shall be a minimum of 2 candlefoot power within 50 feet in all unobstructed
directions from the face of the automated teller machine.

(3) If the automated teller machine is located within 10 feet of the corner of a building
and the automated teller machine is generally accessible from the adjacent side of the
building, there shall be a minimum of 2 candlefoot power along the first 40 unobstructed
feet of the adjacent side of the building.

(4) There shall be a minimum of 2 candlefoot power in the portion of the defined parking
area within 60 feet of the automated teller machine.

(b) This section shall not apply to an automated teller machine which is located inside a
building:

(1) Unless the building is a freestanding installation that exists for the sole purpose of
providing an enclosure for the automated teller machine; or

(2) If an automated teller machine transaction can be conducted from outside the
building.

(June 9, 2001, D.C. Law 13-308, § 506, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.07. Automated teller machine surcharge disclosure.

(a) An operator of an automated teller machine in the District shall not impose a surcharge
upon a customer for the use of an automated teller machine, including a use where there is a
sale of a good or service, unless the surcharge is clearly disclosed to the customer
electronically on the automated teller machine. After the disclosure is made, the person using
the automated teller machine shall be provided an opportunity to cancel the use of the
automated teller machine without incurring a surcharge.

(b) If person using an automated teller machine uses an access device issued by a person
other than the operator of the automated teller machine, the operator of the automated teller
machine shall disclose to the person using the automated teller machine that, in addition to

§■26-131.07- BANKS AND OTHER FINANCIAL INSTITUTIONS

any surcharge charged by the operator, a fee may be charged by the person's financial
institution for the use of the automated teller machine.
(June 9, 2001, D.C. Law 13-308, § 507, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.08. Point-of-sale terminal surcharge disclosure.

(a) An operator of a point-of-sale terminal in the District shall not impose a surcharge upon
a person for the use of the point-of-sale terminal unless the surcharge is clearly disclosed to
the person before the surcharge is incurred and before the customer is obligated to pay for a
good or service.

(b) A disclosure under subsection (a) of this section shall be made as follows:

(1) If the point-of-sale device is purchased before June 9, 2001, or does not have an
electronic display, the fee disclosure shall be on a label meeting federal standards or such
other standards as may be promulgated by the Commissioner consistent with the purposes
of this chapter.

(2) If the point-of-sale device is purchased on or after June 9, 2001, and has an electronic
display, the fee disclosure shall be on a label meeting federal standards or such other
standards as may be promulgated by the Commissioner consistent with the purposes of this
chapter and shall be displayed on the electronic display before the surcharge is incurred
and before the person using the point-of-sale terminal is obligated to pay for the good or
service being purchased.

(June 9, 2001, D.C. Law 13-308, § 508, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.09. Complaints against an operator of an automated teller machine.

(a) An operator of an automated teller machine shall clearly and conspicuously disclose on
a label or sign posted on the automated teller machine, or in clear view of a person viewing
the automated teller machine, the name, address, and telephone number of the Department
and the operator. The label or sign shall also state that a person may send comments or
complaints regarding the automated teller machine to the Department and shall state that the
Department is an agency of the District

(b) The Commissioner may investigate a complaint, in whatever form received, regarding
an automated teller machine. The investigation of the Commissioner under this subsection
may include an examination of the automated teller machine. The operator of the automated
teller machine shall pay to the Commissioner the reasonable costs and expenses incurred by
the Commissioner for the examination or investigation.

(June 9, 2001, D.C. Law 13-308, § 509, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.10. Registration of automated teller machines.

(a) Except as provided in subsections (d) and (e) of this section, an automated teller
machine operated in the District shall be registered with the Commissioner by the operator of

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-131.11

the automated teller machine. The operator shall pay annually to the Commissioner a
nonrefundable registration fee of $500 for the first automated teller machine operated by the
operator in the District and $50 for each additional automated teller machine operated by the
operator in the District. If the operator does not pay the total annual fee imposed under this
subsection, each automated teller machine of the operator in the District shall be considered
not to be registered under this subsection.

(b) No refund or abatement of a registration fee paid under this section shall be made if
the registration is surrendered, cancelled, revoked, or suspended before the expiration of the
period for which the fee was paid.

(c) The Commissioner may suspend, revoke, or refuse to renew the registration of an
operator under this section if the Commissioner finds that the operator or an owner, director,
officer, member, partner, trustee, employee, or agent of the operator has:

(1) Made a material misstatement in the application for registration;

(2) Committed a fraud, engaged in dishonest activity, or made a misrepresentation in
connection with the operation of the automated teller machine;

(3) Demonstrated a lack of competence in connection with the operation of the automated
teller machine; or

(4) Violated any provision of this chapter or any regulation promulgated under this
chapter.

(d) The registration requirement in subsection (a) of this section shall not apply to
automated teller machines owned or operated by a depository institution insured by the
Federal Deposit Insurance Corporation.

(e) The Electronic Fund Transfer Act, approved November 10, 1978 (92 Stat. 3728; 15
U.S.C. § 1693 et seq.), and any regulations issued, or that may be issued, under the Electronic
Fund Transfer Act, except for those provisions, amendments, or regulations that establish
crimes or provide for nonfinancial penalties, are hereby adopted as part of this chapter.
Compliance with the Electronic Fund Transfer Act shall be considered to be compliance with
this section.

(June 9, 2001, D.C. Law 13-308, § 510, 48 DCR 3244; Oct. 3, 2001, D.C. Law 14-28, § 2602, 48 DCR
6981; Mar. 13, 2004, D.C. Law 15-105, § 60, 51 DCR 881.)

Historical and Statutory Notes

Effect of Amendments Law 14-28, the "Fiscal Year 2002 Budget Sup-

D.C. Law 14-28, in subsec. (a), substituted "Ex- P ort Act of 2001 "> was introduced in Council and

cept as provided in subsections (d) and (e) of this assigned Bill No 14-144 which was referred to the

section, an automated" for "An automated"; added Committee Of the ^ Whole. The Bill was adopted

, ,,v , ,. , ,. , .-..^ ,, ^ . t on first and second readings on May 1, 2001, and

subsec. (d) relating to applicability oft he registra- June ^ 2001? reS p ect .ively. Signed by the Mayor

tion requirement; and added subsec. (e) relating to on June 2 9, 2001, it was assigned Act No. 14-85

the Electronic Fund Transfer Act. an( j transmitted to both Houses of Congress for its

D.C. Law 15-105, in subsec. (e), validated previ- review. D.C. Law 14-28 became effective on Octo-

ously made technical corrections. " er 3, 2001.

Law 15-105, the "Technical Amendments Act of

Emergency Act Amendments

2003", was introduced in Council and assigned Bill

For temporary (90 day) amendment of section, No. 15-437, which was referred to the Committee

see § 2402 of Fiscal Year 2002 Budget Support of the Whole. The Bill was adopted on first and

Emergency Act of 2001 (D.C. Act 14-124, August second readings on November 4, 2003, and Decem-

3, 2001, 48 DCR 7861). ber 2, 2003, respectively. Signed by the Mayor on

T • i ,. TT . , PT January 6, 2004, it was assigned Act No. 15-291

Legislative History of Laws and transmitted to both Houses of Congress for its

For Law 13-308, see notes following review. D.C. Law 15-105 became effective on
§ 26-131.01. March 13, 2004.

§ 26-131.11. Record keeping requirements.

An operator of an automated teller machine in the District shall maintain and, upon
request, make available to the Commissioner, in a form satisfactory to the Commissioner,
such books, records, and accounts as wall enable the Commissioner to verify the daily activity
at each of the operator's automated teller machines. An operator shall retain the books,

§ 26-131.11 BANKS AND OTHER FINANCIAL INSTITUTIONS

records, and accounts referred to in the previous sentence for at least 90 days from the date
of the daily activity.

(June 9, 2001, D.C. Law 13-308, § 511, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.12. Penalties.

If the Commissioner finds, after notice and a hearing, that a person has violated this
chapter or a rule or regulation promulgated, or order issued, under this chapter, the
Commissioner may order the person to pay to the Department a civil penalty in such amount
as the Commissioner determines is appropriate; provided, that the amount of the penalty
shall not exceed $1,000 for a violation; provided further, that if there is a continuing violation,
the penalty may be no more than the greater of $1,000 or $100 multiplied by the number of
days that the violation has continued.
(June 9, 2001, D.C. Law 13-308, § 512, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

§ 26-131.13. Authority of Commissioner to issue rules and regulations.

The Commissioner may promulgate rules and regulations to implement the provisions of
this chapter in accordance with subchapter I of Chapter 5 of Title 2.
(June 9, 2001, D.C. Law 13-308, § 513, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-131.01.

Chapter 2
Building Associations.

Subchapter I. General.

Section

26-201. Formation; general nature and powers.

Subchapter I. General.

§ 26-201. Formation; general nature and powers.

(a) Any 5 or more persons who desire to form an incorporated building or homestead
association, all being citizens of the United States, and a majority of them residents of the
District of Columbia, may make, sign, seal, and acknowledge, before some officer authorized
to take the acknowledgment of deeds, and file for record in the Office of the Recorder of
Deeds, a certificate, in writing, to the same effect as that required in Chapters 1 and 3 of Title
29 for the formation of the corporations therein mentioned.

(b) When such certificate shall have been filed for record as aforesaid, the persons who
have signed and acknowledged the same, and their successors, shall become and be a body

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-301

politic and corporate, in fact and in law, by the name stated in the certificate, and by that
name have succession and be capable of suing and being sued in the courts, of the District,
and of purchasing, holding, and conveying such real estate as may be necessary to the
conduct of its business, and to make reasonable bylaws not inconsistent herewith.
(Mar. 3, 1901, 31 Stat. 1298, ch. 854, §§ 687, 688; July 2, 2011, D.C. Law 18-378, § 3(k)(2), 58 DCR 1720.)

Historical and
Effect of Amendments

D.C. Law 19-378, in subsec. (a), substituted
"Chapters 1 and 3 of Title 29" for "Chapter 2 of

Title 29".

Legislative History of Laws

Law 18-378, the "District of Columbia Official
Code Title 29 (Business Organizations) Enactment
Act of 2009", was introduced in Council and as-

Statutory Notes

signed Bill No. 18-500, which was referred to the
Committee on Public Services and Consumer Af-
fairs. The Bill was adopted on first and second
readings on December 7, 2010, and December 21,
2010, respectively. Signed by the Mayor on Feb-
ruary 27, 2011, it was assigned Act No. 18-724 and
transmitted to both Houses of Congress for its
review. D.C. Law 18-378 became effective on July
2, 2011.

Chapter 3
Check Cashers,

Section

26-301. Definitions.
26-311.01. Examinations.

Section

26-317.
26-319.
26-323.

Limitations on fees for cashing checks.

Limitations on business.

Penalties.

§ 26-301. Definitions.
For the purposes of this chapter, the term:

(1) "Check" means any check, draft, money order, personal money order, or other
instrument for the transmission or payment of money.

(2) "Check cashing" means the exchange of a check for money delivered to the presenter
at the time and place of the presentation.

(3) Repealed.

(4) "Issue date" means, on a check held for deferred deposit, the date the check is cashed
and the deferred deposit agreement is originated.

(5) "Licensee" means any person duly licensed by the Superintendent pursuant to this
chapter.

(6) "Limited station" means a type of check cashing business that authorizes the licensee
to carry on the business of cashing checks for employees of a single and particular business
or office and at a single location at or near such particular business or office site.

(7) "Mobile unit" means any vehicle or other movable structure from which the business
of cashing checks is to be conducted.

(8) "Person" means an individual, firm, corporation, business trust, estate, trust, partner-
ship, limited liability company, association, 2 or more persons having a joint or common
interest, or any other legal or commercial entity, or group of individuals however organized
but does not include the United States government, the government of the District of
Columbia, or the United States Postal Service.

(9) "Superintendent" means the Superintendent of the Office of Banking and Financial
Institutions.

(May 12, 1998, D.C. Law 12-111, § 2, 45 DCR 1782; Nov. 24, 2007, D.C. Law 17-42, § 2(a), 54 DCR 9988.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 17-42 repealed par. (3) which had read

as follows:

"(3) 'Deferred deposit' means a supplemental
check cashing service that allows the maker, in the
event of a need for emergency cash, to write a
personal check and receive cash immediately upon

§ 26-301 BANKS AND OTHER FINANCIAL INSTITUTIONS

presentment and qualification, while delaying the on October 3, 2007, it was assigned Act No. 17-115
deposit of the check into his or her personal check- and transmitted to both Houses of Congress for its
ing account, pursuant to an agreement with the review. D.C. Law 17-42 became effective on No-
licensed check casher, for a mutually agreed to vember 24, 2007.
number of days following the issue date of the Effective Dates

check. Post-dating of personal checks cashed and Section 4 of D.C. Law 17-42 provides:

held for deferred deposit shall be prohibited." ((rril . .,,,., ££ , ,. ,, • ., ..»■

1 his act shall take eiiect following the certinca-
Legislative History of Laws t ion by the Chief Financial Officer, through a
Law 17-42, the "Payday Loan Consumer Protec- revised quarterly revenue estimate for fiscal year
tion Amendment Act of 2007", was introduced in 2008, that local funds exceed the annual revenue
Council and assigned Bill No. 17-132 which was estimates incorporated in the fiscal year 2008 bud-
referred to the Committee on Public Service and get and financial plan in an amount sufficient to
Consumer Affairs. The Bill was adopted on first account for its fiscal effect. The Chief Financial
and second readings on July 10, 2007, and Septem- Officer shall set aside revenue to account for the
ber 18, 2007, respectively. Signed by the Mayor cost of fully implementing this act."

§ 26-311.01. Examinations.

(a) The Commissioner, or his or her designated agent, shall examine the affairs, business,
premises, and records of each licensee at least once in every 3-year period and at any other
time that the Commissioner considers necessary or provides by regulation.

(b) Each licensee shall be assessed an examination fee of $100 per examination, plus $20
per hour for each hour or fraction of each hour in excess of 4 hours if an examination of a
licensee exceeds 4 hours.

(May 12, 1998, D.C. Law 12-111, § 12a, as added Oct. 3, 2001, D.C. Law 14-28, § 3102, 48 DCR 6981.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see For Law 14-28, see notes following § 26-131.10.

§ 2802 of Fiscal Year 2002 Budget Support Emer-
gency Act of 2001 (D.C. Act 14-124, August 3,
2001, 48 DCR 7861).

§ 26-317. Limitations on fees for cashing checks.

(a)(1) Beginning January 1, 2011, no licensee under this chapter shall directly or indirectly
charge any other fee, including late fees or other service fees, for accepting or cashing a
payment instrument in excess of the greater of:

(A) Two percent of the face amount of the payment instrument or $3, if the payment
instrument is issued by the federal government or a state or local government;

(B) Ten percent of the face amount of a payment instrument or $5, if the payment
instrument is a personal check or money order; or

(2) A licensee may charge a customer an additional one-time membership fee not to
exceed $5.

(b) The fees for cashing a check shall be evidenced by a receipt. Such receipt shall be
presented to the purchaser upon completion of the transaction.

(May 12, 1998, D.C. Law 12-111, § 18, 45 DCR 1787; Nov. 24, 2007, D.C. Law 17-42, § 2(b), 54 DCR
9988; Mar. 12, 2011, D.C. Law 18-315, § 2, 57 DCR 12412.)

Historical and Statu tory Notes

Effect of Amendments D.C. Law 18-315 rewrote subsec. (a), which had

D.C. Law 17-42, in subsec. (a), deleted the sen- read as follows :

tence: "An additional verification, handling, and "( a ) N ° licensee under this chapter shall directly

documentation processing fee may be charged, ° r ^directly charge or collect in fees or charges

pursuant to § 26-319, for a personal check held for f< * cash / n £ a check a f um to ex( ;f ed 5 °{ c °|^ e ***

deferred deposit " e ° a £ overnment or payroll check, 7% of the

1 face value of an insurance check, 10% of the face

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-319

value of a personal check or money order, or $4,
whichever is greater. Each licensee shall conspic-
uously post, in both English and Spanish, and at all
times display in every location and upon every
mobile unit licensed under this chapter, a schedule
of fees and charges permitted hereunder, which
schedule shall be approved by the Superintendent
prior to posting."

Legislative History of Laws

For Law 17-42, see notes following § 26-301.

Law 18-315, the "Alternative Money Lending
and Services Reform Amendment Act of 2010",
was introduced in Council and assigned Bill No.
18-715, which was referred to the Committee on
Public Services and Consumer Affairs. The Bill
was adopted on first and second readings on No-

vember 9, 2010, and November 23, 2010, respec-
tively. Signed by the Mayor on December 9, 2010,
it was assigned Act No. 18-636 and transmitted to
both Houses of Congress for its review. D.C. Law
18-315 became effective on March 12, 2011.
Effective Dates
Section 4 of D.C. Law 17-42 provides:
"This act shall take effect following the certifica-
tion by the Chief Financial Officer, through a
revised quarterly revenue estimate for fiscal year
2008, that local funds exceed the annual revenue
estimates incorporated in the fiscal year 2008 bud-
get and financial plan in an amount sufficient to
account for its fiscal effect. The Chief Financial
Officer shall set aside revenue to account for the
coat of fully implementing this act,"

§ 26-319. Limitations on business.

(a) No licensee under this chapter shall engage in the business of discounting of notes, bills
of exchange, checks, or other evidences of indebtedness, nor shall such a discounting business
be conducted on the same premises where the licensee is conducting business pursuant to this
chapter.

(b) No licensee shall at any time cash or advance any monies on a post dated check.

(May 12, 1998, D.C. Law 12-111, § 20, 45 DCR 1788; Nov. 24, 2007, D.C. Law 17-42, § 2(c), 54 DCR
9988.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 17-42 repealed subsec. (c) which had
read as follows:

"(c)(1) No licensee shall at any time cash or
advance any monies on a personal check for a fee
in excess of 10% of the face amount of the check
as set out in § 26-317; provided, however, that
where the licensee enters into an agreement with
a customer to hold his or her personal check for
deferred deposit, the licensee may charge an addi-
tional fee for verification, handling, and documen-
tation processing totaling no more than $5 on a
personal check with a face amount of up to $250;
no more than $10 on a personal check with a face
amount of $250.01 to $500; no more than $15 on a
personal check with a face amount of $500.01 to
$750; and no more than $20 on a personal check
with a face amount of $750.01 to $1,000.

"(2) A personal check for deferred deposit must
bear an issue date of not later than the date the
check is cashed and the deferred deposit agree-
ment is originated.

"(3) The deposit date of a check held for de-
ferred deposit shall not exceed 31 days following
the issue date of the check as agreed to in the
Deferred Deposit Disclosure Agreement, Adden-
dum I; provided, however, that when the deposit
date occurs on a weekend or bank holiday, the
check may be deposited on the next business day.

"(4) The minimum face amount of a check held
for defeiTed deposit must amount to no less than

$50. The aggregate face amount of checks being
held for deferred deposit must not exceed $1,000
per customer.

"(5) The licensee shall retain all rights and privi-
leges of a holder in due course on checks present-
ed for deferred deposit.

"(6) The license to offer deferred deposit ser-
vices shall be limited to only those businesses
whose dominant business activity is financial ser-
vices. The licensee may offer deferred deposit
sendees only when the Superintendent has deter-
mined that the licensee's dominant business activi-
ty is financial services.

"(7) Fees charged for deferred deposit transac-
tions shall be evidenced by a receipt. Such receipt
shall be presented to the purchaser upon comple-
tion of the transaction."

Legislative Histoiy of Laws

For Law 17-42, see notes following § 26-301.
Effective Dates

Section 4 of D.C. Law 17-42 provides:

"This act shall take effect following the certifica-
tion by the Chief Financial Officer, through a
revised quarterly revenue estimate for fiscal year
2008, that local funds exceed the annual revenue
estimates incorporated in the fiscal year 2008 bud-
get and financial plan in an amount sufficient to
account for its fiscal effect. The Chief Financial
Officer shall set aside revenue to account for the
cost of fully implementing this act."

§ 26-323

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-323. Penalties,

Historical and Statutory Notes

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 201 of the Child Support and Welfare Re-

form Compliance Emergency Amendment Act of
2001 (D.C. Act 13-446, November 7, 2000, 47 DCR
9213).

Chapter 4

Common Trust Funds.

Uniform Common Trust Fund Act

Table of Jurisdictions Wherein Act Has Been Adopted

For text of Uniform Act, and variation notes and annotation materials for
adopting jurisdictions, see Uniform Laws Annotated, Master Edition, Volume 7,
Pt II.

Jurisdiction Laws Effective Date

Alabama . 1943, p. 563 7-8-1943

Alaska 1964, c. 14 7-1-1964

Arizona 1971, c. 160 1-1-1972

Arkansas 1947, Act 394 7-1-1947

California 1947, p. 903 9-19-1947

Colorado 1947, c. 325 1-1-1948

District of Columbia . . . 1949, 63 Stat. 11-1-1949

938

Florida 1941, c. 20353 5-19-1941

Hawaii 1947, c. 130

Idaho 1949, c. 34 2-5-1949

Illinois 1943, p. 230 7-29-1943

Iowa 1963, c. 326 1-1-1964

Kansas 1951, c. 123 3-29-1951

Maine 1954, c. 59 9-1-1951

Massachusetts 1969, c. 417 6-16-1969

Michigan 1941, No. 174 1-10-1942

Mississippi. 1950, c. 328 6-30-1950

Missouri 1955, p. 253 5-24-1955

Montana 1955, c. 64 3-4-1955

Nebraska 1953, c. 67 3-28-1953

Nevada 1955, c. 21 7-1-1955

New Hampshire 1953, c. 109 4-17-1953

New Mexico 1955, c. 66 3-4-1955

North Carolina 1939, c. 200 7-1-1939

Oklahoma 1965, c. 161 10-21-1965

Oregon 1951, c. 79 2-22-1951

Rhode Island 1956, c. 3839

South Dakota 1941, c. 20 3-14-1941

Tennessee 1953, c. 148 4-10-1953

Texas 1947, c. 209, 1-1-1948

p. 371

Utah 1951, c. 9 3-1-1951

Washington 1943, c. 55 3-3-1943

West Virginia . ... 1945, c. 4 2-22-1945

Wisconsin . .. 1943, c. 274 6-10-1943

Wyoming 1955, c. 17 1-25-1955

Statutory Citation

Code 1975, §§ 5-12A-1 to 5-12A-15.
AS 06.35.010 to 06.35.050.
A.R.S. §§ 6-871 to 6-874.
A.C.A. §§ 28-69-201, 28-69-202.
West's Ann. Cal. Fin. Code, § 1564.
West's C.R.S.A. §§ 11-24-101 to

11-24-107.
D.C. Official Code, 2001 Ed. §§ 26-401 to

26-404.
West's F.S.A. §§ 660.42 to 660.44.
HRS § 412:8-402.
I.C. §§ 68-701 to 68-703.
S.H.A. 760 ILCS 45/1 to 45/8.
I.C. A. §§ 633.126 to 633.129.
K.S.A. 9-1609, 9-1610.
18-A M.R.S.A. §§ 7-501, 7-502.
M.G.L.A. c. 203A, §§ 1 to 6.
M.C.LA. §§ 555.101 to 555.113.
Code 1972, § 81-5-37.
V.A.M.S. § 362.580.
MCA 32-1-701 to 32-1-708.
R.R.S.1943, §§ 30-3202,30-3207.
N.R.S. 164.070 to 164.100.
RSA 391:1 to 391:8.
NMSA 1978, §§ 46-1-13 to 46-1-16.
G.S. §§ 53-163.5 to 53-163.9.
6 0kl.St.Anrt. § 1010.
0RS 709.170.

Gen. Laws 1956, §§ 18-5-1 to 18-5-7.
SDCL 55-6-1 to 55-6-7.
T.C.A. §§ 35-4-101 to 35-4-105.
V.T.C.A. Property Code, §§ 113.171,

113.172.
U.CA.1953, 7-5-13.

West's RCWA 11.102.010 to 11.102.050.
Code, 44-6-6 to 44-6-8.
W.S.A. 223.055.
Wyo.Stat.Ann. §§ 2-3-401 to 2-3-406.

100

BANKS AND OTHER FINANCIAL INSTITUTIONS

§26-431.02

Chapter 4A
Community Development by Financial Institutions.

Section

26-431.01.
26-431.02.
26-431.03.
26-431.04.

26-431.05.

Short title.

Definitions.

Community needs obligation.

Community development plan require-
ment.

Monitoring compliance with the com-
munity development plan.

Section

26-431.06.

26-431.07.

26-431.1

Rating system for community develop-
ment performance.

Examinations in cooperation with oth-
er regulators.

Authority of Commissioner to issue
rules and regulations.

§ 26-431.01. Short title.

This chapter may be cited as the "Community Development Act of 2000"
(June 9, 2001, D.C. Law 13-308, § 401, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

Law 13-308, the "21st Century Financial Mod-
ernization Act of 2000," was introduced in Council
and assigned Bill No. 1.3-867, which was referred
to the Committee on Economic Development. The
Bill was adopted on first and second readings on

§ 26-431.02. Definitions.

November 8, 2000, and December 5, 2000, respec-
tively. Signed by the Mayor on January 26, 2001,
it was assigned Act No. 13-597 and transmitted to
both Houses of Congress for its review. D.C. Law
13-308 became effective on June 9, 2001.

For the purposes of this chapter, the term:

(1) "Community development" means:

(A) Affordable housing (including single-family and multi-family rental housing and
homeownership) for low-income or moderate-income individuals and families and related
retail and community facilities development;

(B) Community services targeted to low-income or moderate-income individuals and
families;

(C) Activities that promote economic development by financing businesses that meet
the size eligibility standards of the Small Business Administration Certified Development
Company Program or the Small Business Administration Small Business Investment
Company Program or have gross annual revenues of $1 million or less;

(D) Activities that revitalize or stabilize low-income or moderate-income areas; or

(E) Activities that seek to prevent defaults or foreclosures on loans made for the
purposes described in subparagraphs (A) and (C) of this paragraph.

(2) "Community Reinvestment Act" shall mean the Community Reinvestment Act of
1977, approved October 12, 1977 (91 Stat. 1147; 12 U.S.C. .§ 2901 et seq.).

(3) "Commissioner" shall have the same meaning as set forth in § 26-551.02(7).

(4) "Department" shall have the same meaning as set forth in § 26-551.02(9).

(5) "Designated development areas" means any of the following located in the District:

(A) A low-income or moderate-income area;

(B) An area designated as underserved or economically disadvantaged by the Commis-
sioner; or

(C) A commercial, industrial, residential, or other economic development project which
the Commissioner determines will benefit the District.

(6) "Federal financial supervisory agency" means the Office of the Comptroller of the
Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit
Insurance Corporation, the Office of Thrift Supervision and any successor to any of the
foregoing agencies, as applicable to the specific type of bank.

(7) "Financial institution" shall have the same meaning as in § 26-551.02(18).

(8) "Low-income" shall have the same meaning as set forth in § 26-1401.02(21).

101

§ 26-431.02 BANKS AND OTHER FINANCIAL INSTITUTIONS

(9) "Low-income area" means a census tract or block numbering area in which the
median individual or family income does not exceed 65% of the median income of the
Washington, D.C, metropolitan area as determined by the statistics of the United States
Department of Housing and Urban Development.

(10) "Moderate-income" shall have the same meaning as set forth in § 26-1401.02(22).

(11) "Moderate-income area" means a census tract or block numbering area in which the
median individual or family income does not exceed 80% of the median income for the
Washington, D.C. metropolitan area as determined by the statistics of the United States
Department of Housing and Urban Development.

(12) "Minority group" means African-Americans, Hispanic-Americans, Latinos, Asian-
Americans, Pacific Islander-Americans, American Indians; Native Americans, or Alaskan-
Natives.

(13) "Minority-owned business" means a business in which:

(A) At least 51% ownership and control is held by individuals who are members of a
minority group;

(B) At least 51% of the individuals that make policy decisions and actively manage
day-to-day operations are members of a minority group; and

(14) "Mortgage loan" means a loan that is secured by residential real property.

(15) "Small business loan" means a small business loan as defined in Federal Reserve
System Regulation BB, 12 C.F.R. Part 228.

(16) "Women-owned business" means a business in which:

(A) At least 51% of the ownership and control is held by a woman or women;

(B) A woman or women constitute at least 51% of the individuals that make policy
decisions and actively manage day-to-day operations; and

(June 9, 2001, D.C. Law 13-308, § 402, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(k), 51 DCR
2817.)

Historical and Statutory Notes

Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 15-166 rewrote pars. (3) and (4) which 15-381, February 27, 2004, 51 DCR 2653).

Legislative History of Laws

had read as follows:

"(3) 'Commissioner' means the Commissioner of
the Department of Banking and Financial Institu- * or Law 13 -308, see notes following

tions. § 26-431.01.

"(4) 'Department' means the Department of For Law 15-166, see notes following

Banking and Financial Institutions." § 26-131.02.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2(k) of Consolidation of Financial Services

§ 26-431.03. Community needs obligation.

A financial institution shall have a continuing and affirmative obligation to meet the credit
needs of its local communities, including low-income and moderate-income area, consistent
with the safe and sound operation of the financial institution.

(June 9, 2001, D.C. Law 13-308, § 403, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-431.01.

102

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-431.04

§ 26-431.04. Community development plan requirement.

(a)(1) A financial institution shall submit a community development plan stating the
financial institution's plans for meeting the credit and financial services needs of the residents
of the District, particularly in designated development areas. A financial institution shall
submit a community development plan annually, when there is a revision to the plan, and at
such times as the Commissioner, by rule, may require.

(2) The community development plan submitted under paragraph (1) of this subsection
shall commit the financial institution and its subsidiaries to:

(A) Provide monitoring reports on forms designated by, and at intervals specified by,
the Commissioner;

(B) Provide additional information as requested by the Commissioner to monitor
compliance;

(C) Permit examinations of the records of the financial institution to the extent
considered necessary by the Commissioner to monitor and enforce compliance with the
community development plan;

(D) Participate in meetings on the community development performance of the
financial institution at times designated by the Commissioner; and

(E) Provide that the commitment shall be a binding agreement on the financial
institution and the financial institution's successors and assignees.

(b) The Commissioner shall assess the record of a financial institution, determine whether
the financial institution is satisfying its continuing and affirmative obligation to meet the
credit needs of its local communities, including low-income and moderate-income areas,
consistent with the safe and sound operation of the financial institution, and shall prepare a
report on the assessment and determination:

(1) In connection with an application for a certificate of authority under the District of
Columbia Banking Code;

(2) In connection with the acquisition of a bank, savings institution, or holding company
located in the District under the Regional Interstate Banking Act of 1985; and

(3) As required under § 26-431.05.

(c) In determining whether the financial institution is satisfying its continuing and affirma-
tive obligation to meet the credit needs of its local communities, including low-income and
moderate-income neighborhoods, the Commission shall consider:

(1) The financial institution's Community Reinvestment Act rating and prior evaluations
and any community development evaluations from the 3 prior years;

(2) Plans of the financial institution to make mortgage loans in the District and in
designated development areas;

(3) Plans of the financial institution to make consumer loans, other than mortgage loans,
in the District and in designated development areas;

(4) Plans of the financial institution to:

(A) Open or close branches in the District and in designated development areas;

(B) Provide basic deposit and checking accounts, such as lifeline accounts, and
electronic transfer accounts designed for low-income persons; and

(5) Plans of the financial institution to:

(A) Procure services or supplies from District businesses, including minority-owned
and w T omen-owned District businesses; and

(B) Hire District residents;

(6) Plans of the financial institution to seek and place District residents, including women
and members of minority groups, on the board of directors of the financial institution,
subsidiaries or affiliates of the financial institution, and the holding company of the financial
institution;

(7) Plans of the financial institution to:

(A) Provide seminars and individualized counseling on consumer and commercial
lending in the District and in designated development areas; and

103

§■26-431.04 BANKS AND OTHER FINANCIAL INSTITUTIONS

(B) Establish and maintain flexible credit terms and underwriting guidelines;

(8) Plans of the financial institution regarding the marketing of, and marketing budget
for, the community development plan in the District, including plans to market the
community development plan in the designated development areas as well as the types of
media to be used;

(9) Plans of the financial institution to:

(A) Enter into partnerships with nonprofit and community groups, for-profit develop-
ers, District agencies, and colleges and universities and other proposed activities that
promote public/private partnerships and lending programs with community-based devel-
opment organizations; and

(B) Participate in other community programs that foster community development in
the District;

(10) Designation of a senior lending officer responsible for implementing and overseeing
the community development plan; and

(11) If the determination is in connection with the acquisition of a bank, savings
institution, or holding company:

(A) The status of the prior community development commitments of the financial
institution to be acquired; and

(B) Plans of the acquiring entity to continue the prior commitments.

(d) A report prepared under subsection (b) of this section shall include the assessment
factors utilized to determine the financial institution's descriptive rating, the financial
institution's descriptive rating, and the basis for the Commissioner's determination of the
financial institution's descriptive rating.

(e) A report prepared under subsection (b) of this section shall be available to the public
upon request.

(June 9, 2001, D.C. Law 13-308, § 404, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-431.01.

§ 26-431.05. Monitoring compliance with the community development plan.

(a) The Commissioner shall monitor whether a financial institution is satisfying its continu-
ing and affirmative obligation to meet the credit needs of its local communities, including low-
income and moderate-income areas, consistent with safe and sound operation of the financial
institution.

(b) The Commissioner shall issue an annual report to the Mayor and the Council on each
financial institution's compliance with its community development plan. In the annual report,
the Commissioner shall include an assessment of the community reinvestment performance of
each financial institution using the applicable methodology set forth in the Community
Reinvestment Act and shall include the rating for each financial institution under the system
developed under § 26-431.06.

(June 9, 2001, D.C. Law 13-308, § 405, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26^31.01.

§ 26-431.06. Rating system for community development performance.

(a) The Commissioner shall establish, by regulation, a system to rate the community
development performance of a financial institution. The system shall include the following
rating categories:

(1) Outstanding record of performance in meeting the credit needs of its local communi-
ties;

104

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-53 1

(2) Highly satisfactory record of performance in meeting the credit needs of its local
communities;

(3) Satisfactory record of performance in meeting the credit needs of its local communi-
ties;

(4) Needs to improve record of performance in meeting the credit needs of its local
communities; and

(5) Substantial noncompliance in meeting the credit needs of its local communities.

(b) The Commissioner shall consider the compliance of the financial institution with the
community development plan submitted under § 26-431.03 in assessing and rating the
community development performance of the financial institution.
(June 9, 2001, D.C. Law 13-308, § 406, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-431.01.

§ 26-431.07. Examinations in cooperation with other regulators.

(a) The Commissioner may enter into cooperative agreements with financial institutions
regulators in jurisdictions other than the District, including federal regulators, for the
coordination of, or joint participation, in a community performance evaluation and the amount
and assessment of fees for the examination or actions related to the examination.

(b) The Commissioner may accept evaluations performed under the agreements described
in subsection (a) of this section.

(June 9, 2001, D.C. Law 13-308, § 407, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-431.01.

§ 26-431.08. Authority of Commissioner to issue rules and regulations.

The Commissioner may promulgate rules and regulations to implement the provisions of
this chapter pursuant to subchapter I to Chapter 5 of Title 2.
(June 9, 2001, D.C. Law 13-308, § 408, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-431.01.

Chapter 5A
Data Match Requirements for Financial Institution.

Section Section

26-531. Definitions. 26-533. Liability of I V-D agency.

26-532. Obligations of financial institutions; fees;
liability; penalties.

§ 26-531. Definitions.

For purposes of this chapter, the term:

(1) "Account" means a demand deposit account, checking or negotiable withdrawal order
account, savings account, time deposit account, or money-market mutual fund account.

105

§ 26-531 BANKS AND OTHER FINANCIAL INSTITUTIONS

(2) "Financial institution" means the institution as defined in section 469A(d)(l) of the
Social Security Act, approved August 22, 1996 (110 Stat. 2105; 42 U.S.C. § 669A(d)(l)).

(3) "IV-D agency' " means the organizational unit of the District government, or any
successor organizational unit, that is responsible for administering or supervising the
administration of the District's State Plan under title IV, part D of the Social Security Act,
approved January 4, 1975 (88 Stat. 2351; 42 U.S.C. § 651 et seq.), pertaining to parent
locator services, paternity establishment, and the establishment, modification, and enforce-
ment of support orders.

(Apr. 3, 2001, D.C. Law 13-269, § 202, 48 DCR 1270.)

Historical and Statutory Notes

Temporary Addition of Section 2000", was introduced in Council and assigned Bill

Section 201 of D.C. Law 13-207 added this sec- No. 13-825. The Bill was adopted on first and

tion. second readings on September 19, 2000, and Octo-

Section 401(b) of D.C. Law 13-207 provides that ber 3, 2000, respectively. Signed by the Mayor on

the act shall expire after 225 days of its having October 24, 2000, it was assigned Act No. 13-449

taken effect. an( j transmitted to both Houses of Congress for its

Emergency Act Amendments review. D.C. Law 13-207 became effective on

For temporary (90 day) addition of section, see March 31, 2001.

§ 201 of the Child Support and Welfare Reform T i0 „ n ,. u „. ... n , , „ r .„

Compliance Emergency Amendment Act of 2001 n *f* 13-269, the Child Support ™d Welfare

(D.C. Act 13-446, November 7, 2000, 47 DCR ■ Reform Compliance Amendment Act of 2000 , was

9213). introduced in Council and assigned Bill No. 13-254,

For temporary (90 day) addition of section, see which was referred to the Committee on Human

§ 202 of Child Support and Welfare Reform Com- Services. The Bill was adopted on first and sec-

pliance Congressional Review Emergency Amend- ond readings on November 8, 2000, and December

ment Act of 2001 (D.C. Act 14-5, February 13, 5, 2000, respectively. Signed by the Mayor on

2001, 48 DCR 2440). January 8, 2001, it was assigned Act No. 13-559

Legislative History of Laws and transmitted to both Houses of Congress for its

Law 13-207, the "Child Support and Welfare review. D.C. Law 13-269 became effective on

Reform Compliance Temporary Amendment Act of April 3, 2001.

§ 26-532. Obligations of financial institutions; fees; liability; penalties.

(a) A financial institution doing business in the District shall:

(1) Upon the request of the IV-D agency, enter into agreements with the IV-D agency
to develop and operate a data-match system in which the financial institution is required to
provide for each calendar quarter the name, record address, social security number or
other taxpayer identification number, and other identifying information (including account
number) for each noncustodial parent who maintains an account at the institution, individu-
ally or jointly, and who owes past-due child or spousal support that is enforced by the IV-D
agency, as identified by the Mayor by name and social security number or other taxpayer
identification number; and

(2) Encumber or surrender assets held by the institution on behalf of a noncustodial
parent who is subject to a lien pursuant to § 46-224 in response to a notice of lien or levy
from the Superior Court or the IV-D agency.

(b) The IV-D agency may pay a reasonable fee to a financial institution for conducting the
data match provided for in subsection (a) of this section, not to exceed the actual costs
incurred by the financial institution.

(1) Any disclosure of information to the IV-D agency under subsection (a) of this section;

(2) Encumbering or surrendering, in response to a notice of lien or levy issued by the
IV-D agency, any assets it holds; or

(3) Any other action taken in good faith to comply with subsection (a) of this section.

(d) A financial institution that intentionally fails to comply with subsection (a) of this
section shall be subject to a penalty of $5,000 for each failure to conduct a data match with
data that the IV-D agency submits or attempts to submit to the financial institution. For
purposes of this subsection, a single data submission may include data concerning multiple

106

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-533

obligors. Penalties pursuant to this subsection shall be enforced in the Superior Court by the
Corporation Counsel of the District of Columbia.
(Apr. 3, 2001, D.C. Law 13-269, § 203, 48 DCR 1270.)

Historical and
Temporary Addition of Section

Section 201 of D.C. Law 13-207 added this sec-
tion.

Section 401(b) of D.C. Law 13-207 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) addition of section, see
§ 201 of the Child Support and Welfare Reform
Compliance Emergency Amendment Act of 2001

Statutory Notes

(D.C. Act 13-446, November 7, 2000, 47 DCR
9213).

For temporary (90 day) addition of section, see
§ 203 of Child Support and Welfare Reform Com-
pliance Congressional Review Emergency Amend-
ment Act of 2001 (D.C. Act 14-5, February 13,
2001, 48 DCR 2440).
Legislative History of Laws

For Law 13-207, see notes following § 26-531.

For Law 13-269, see notes following § 26-531.

§ 26-533. Liability of IV-D agency.

The IV-D agency shall disclose a person's financial records obtained from a financial
institution only for the purpose of, and to the extent necessary in, establishing, modifying, or
enforcing a support obligation of that person. Unauthorized disclosure may result in the
awarding of civil damages pursuant to section 469A(c) of the Social Security Act, approved
August 22, 1996 (110 Stat. 2105; 42 U.S.C. § 659A(c)).
(Apr. 3, 2001, D.C. Law 13-269, § 204, 48 DCR 1270.)

Historical and
Temporary Addition of Section

Section 201 of D.C. Law 13-207 added this sec-
tion.

Section 401(b) of D.C. Law 13-207 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) addition of section, see
§ 201 of the Child Support and Welfare Reform
Compliance Emergency Amendment Act of 2001

Statutory Notes

(D.C. Act 13-446, November 7, 2000, 47 DCR
9213).

For temporary (90 day) addition of section, see
§ 204 of Child Support and Welfare Reform Com-
pliance Congressional Review Emergency Amend-
ment Act of 2001 (D.C. Act 14-5, February 13,
2001, 48 DCR 2440).
Legislative History of Laws

For Law 13-207, see notes following § 26-531.

For Law 13-269, see notes following § 26-531.

Chapter 5B
Administration of the Banking Code.

Subchapter I. General Provisions.

Section

26-551.01. Short title.
26-551.02. Definitions.

Subchapter II. Abolishment of Department of
Banking and Financial Institutions; Com-
missioner of the Department of Banking
and Financial Institutions.

26-551.03. Administration of the District of Co-
lumbia Banking Code.

26-551.04. Appointment of the Commissioner of
the Department of Banking and Fi-
nancial Institutions. [Repealed 1 ]

26-551.05. General powers and responsibilities of
the Commissioner.

Section

Subchapter III. Financial Institutions
Advisory Board.

26-551.06. Establishment of the Financial Insti-
tutions Advisory Board.

26-551.07. Members of the Financial Institutions
Advisory Board; compensation.

26-551.08. Oi'ganization and operation of the
Board.

26-551.09. Weight of advice of the Board.

Subchapter IV. Investigation, Examination,

and Enforcement Powers of the

Commissioner.

26-551.10. Examinations of financial institutions.
26-551.11. Reports on financial institutions.

107

§26-533

BANKS AND OTHER FINANCIAL INSTITUTIONS

Section

26-551.12. Initiation of formal investigation of a

financial institution.
26-551.13. Notice of charges; hearing; final order.
26-551.14. Notification of other government

agencies.
26-551.15. Modification or rescission of orders.
26-551.16. Cease and desist order.
26-551.17. Temporary cease and desist order.
26-551.18. Confidentiality of information.
26-551.19. Enforcement of Department order,

subpoena, or notice of charges.

Section

26-551.20. Judicial review.

26-551.21. Penalty for violation of final order.

Subchapter V. Generally
Prohibited Activities.

26-551.22. Prohibition of fraud.

Subchapter VI. Miscellaneous Provisions.

26-551.23. Rulemaking.
26-551.24. [Reserved]
26-551.25. Validity of prior law.

Subchapter I. General Provisions.

§ 26-551.01. Short title.

This chapter may be cited as the "General Provisions of the 21st Century Financial
Modernization Act of 2000".
(June 9, 2001, D.C. Law 13-308, § 101, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

Law 13-308, the "21st Century Financial Mod-
ernization Act of 2000", was introduced in Council
and assigned Bill No. 13-867, which was referred
to the Committee on Economic Development. The
Bill was adopted on first and second readings on

§ 26-551.02. Definitions.

For the purposes of this chapter, the term:

(1) "Affiliate" means a financial institution holding company under federal law or a
subsidiary or service corporation of a financial institution holding company.

(2) "Appropriate federal financial institutions agency" means the federal agency with
statutory authority over the financial institution activities of a financial institution.

(3) "Bank" means an institution that engages in the business of banking, including a
trust company, savings bank, savings and loan association, and credit union.

(4) "Bank holding company" shall have the same meaning as set forth in section 2(a) of
the Bank Holding Company Act of 1956, approved May 9, 1956 (70 Stat. 133; 12 § U.S.C.
1841(a)).

(5) "Business of banking" means activities and transactions involving banking, including:
(A) receiving deposits, paying checks, and lending money; (B) activities of a bank which are
supervised by the Commissioner; and (C) activities incidental, necessary, or convenient to
banking.

(6) "Capital" means capital deposits, surplus, and undivided earnings.

(7) "Commissioner" means the Commissioner of the Department of Insurance, Securi-
ties, and Banking.

(8) "Credit union" means a financial institution organized as a cooperative association
with a limited membership and operating with insurance provided by the National Credit
Union Administration.

(9) "Department" means the Department of Insurance, Securities, and Banking.

(10) "Director" means a director or trustee of an organization or a person with functions
similar to the functions of a director or trustee.

(11) "District" means the District of Columbia.

(12) "District bank" means a bank chartered or organized under the District of Columbia
Banking Code and under the authority and supervision of the Commissioner or a bank
authorized to do business under the laws of the District.

108

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-551.02

(13) "District credit union" means . a credit union chartered or organized under the
District of Columbia Banking Code and under the authority and supervision of the
Commissioner or a credit union authorized to do business under the laws of the District.

(14) "District of Columbia Banking Code" means the statutory provisions concerning
banking and financial institutions which are codified in Title 26 of the District of Columbia
Official Code, laws administered by the Commissioner, and rules and regulations promul-
gated under those statutory provisions and laws.

(15) "District savings institution" means a savings institution chartered or organized
under the District of Columbia Banking Code and under the authority and supervision of
the Commissioner or a savings institution authorized to do business under the laws of the
District.

(16) "Executive officer" means a person who participates or has authority to participate,
other than in the capacity of a director, in major policymaking functions of a financial
institution, whether or not the person has an official title or receives compensation from the
financial institution. The term "executive officer" shall not include a person who may
exercise discretion in the performance of duties and functions, including discretion in the
making of loans, if the person's exercise of discretion is limited by policy standards adopted
by the board of directors of the financial institution and the person does not participate in
major policymaking functions of the financial institution. The chair of the board, the
president, chief executive officer, chief operating officer, chief financial officer, every
executive vice president of a financial institution, and the senior trust officer of a trust
company shall be presumed to be executive officers unless the person is excluded, by
resolution of the board of directors or by the bylaws of the financial institution, from
participating, other than in the capacity of a director, in major policymaking functions of
the financial institution and the person does not actually participate in major policymaking
functions of the financial institution.

(17) "Federal agency" means an agency of the United States of America.

(18) "Financial institution" means a bank, savings institution, credit union, foreign bank,
trust company, non-depository financial institution, or any other person which is regulated,
supervised, examined, or licensed by the Department of Insurance, Securities, and Bank-
ing; which has applied to be regulated, super-vised, examined, or licensed by the Depart-
ment of Insurance, Securities, and Banking; which is subject to the regulation, supervision,
examination, or licensure by the Department of Insurance, Securities, and Banking; or
which is engaged in an activity covered by the District of Columbia Banking Code.

(19) "Non-depository financial institution" means a financial institution that is engaged in
a regulated activity and that is not a bank or credit union.

(20) "Order" means an approval, consent, authorization, exemption, denial, prohibition,
requirement, or other administrative action.

(21) "Person" means an individual, corporation, trust, joint venture, company, associa-
tion, firm, partnership, society, joint stock company, pool syndicate, sole proprietorship,
unincorporated organization, fiduciary business, or any other similar entity.

(22) "Regulated activity" means an activity authorized and regulated under the District
of Columbia Banking Code and under the authority and supervision of the Commissioner.

(23) "Savings institution" means a savings and loan association or savings bank.

(24) "Subsidiary" means a company in which a person owns at least a majority of the
shares or equity interest or which the person controls.

(June 9, 2001, D.C. Law 13-308, § 102, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(a), 51 DCR

2817.)

Historical and Statutory Notes

Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 15-166, in pars. (7), (9), and (18), 15-381, February 27, 2004, 51 DCR 2653).

substituted "Department of Insurance, Securities Legislative History of Laws

and Banking tor Department ot Banking and

Financial Institutions". Fo1 ^ Law 13-308, see notes following

Emergency Act Amendments §26-551.01.

For temporary (90 day) amendment of section, For Law 15-166, see notes following

see § 2(a) of Consolidation of Financial Services § 26-131.02.

109

§26-551,03

BANKS AND OTHER FINANCIAL INSTITUTIONS

Subchapter II. Abolishment of Department of Banking and

Financial Institutions; Commissioner of the Department
of Banking and Financial Institutions.

§ 26-551.03. Administration of the District of Columbia Banking Code.

(a) Repealed.

(b) The Department shall administer the provisions of the District of Columbia Banking
Code on behalf of the Mayor.

(c) The Department of Banking and Financial Institutions and the position of the Commis-
sioner of the Department of Banking and Financial Institutions are abolished.

(d) Repealed.

(e) Repealed.

(f) Repealed.

(g) References in any statute, regulation, or rule of the District to the Superintendent of
the Office of Banking and Financial Institutions or the Office of Banking and Financial
Institutions shall mean the Commissioner and the Department, respectively.

(h) Repealed.

(June 9, 2001, D.C. Law 13-308, § 103, 48 DCR 3244; Oct. 19, 2002, D.C. Law 14-213, § 18(c), 49 DCR
8140; June 11, 2004, D.C. Law 15-166, § 2(b), 51 DCR 2817.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 14-213, in subsec. (c), validated a
previously made technical correction.

D.C. Law 15-166, in the section name line, sub-
stituted "Administration of the District of Colum-
bia Banking Code." for "Advisory Neighborhood
Commissions-Duties and responsibilities; notice;
great weight; access to documents; reports; con-
tributions."; repealed subsecs. (a), (d), (e), (f), and
(h); in subsec. (b), deleted "of Banking and Finan-
cial Institutions is established and" following 'The
Department"; rewrote subsec. (c); and, in subsec.
(g), deleted the second sentence which had read
"All agreements entered into with, and correspon-
dence, invoices, certificates of operation, licenses,
orders, memoranda, and regulations issued by, the
Superintendent of the Office of Banking and Fi-
nancial Institutions and the Office of Banking and
Financial Institutions shall continue in effect as if
the agreements entered into with, and correspon-
dence, invoices, certificates of operation, licenses,
orders, memoranda, and regulations were issued
by, the Commissioner or the Department, respec-
tively." Prior to amendment, subsecs. (a), (c), (d),
(e), (f), and (h) had read as follows:

"(a) The position of the Superintendent of the
Office of Banking and Financial Institutions and
the Office of Banking and Financial Institutions
are abolished."

"(c) The position of the Commissioner of the
Department of Banking and Financial Institutions
is established. The Commissioner is the head of
the Department of Banking and Financial Institu-
tions and shall administer the Department in ac-
cordance with this chapter.

"(d) All powers, duties, responsibilities, and
functions of the Superintendent of the Office of
Banking and Financial Institutions and of the Of-
fice of Banking and Financial Institutions shall be
transferred upon June 9, 2001, to the Commission-
er and the Department, respectively.

"(e) The Commissioner and the Department
shall be the successors in interest to all the rights,
obligations, and property of the Superintendent of
the Office of Banking and Financial Institutions
and the Office of Banking and Financial Institu-
tions, respectively. The Commissioner and the De-
partment shall assume all of the debts, liabilities,
and assets of the Superintendent of the Office of
Banking and Financial Institutions and the Office
of Banking and Financial Institutions, respectively.

"(f) Any pending action or proceeding by or
against the Superintendent of the Office of Bank-
ing and Financial Institutions or the Office of
Banking and Financial Institutions may be prose-
cuted to judgment, and the judgment shall bind
the Commissioner and the Department. In any
pending action or proceeding by or against the
Superintendent of the Office of Banking and Fi-
nancial Institutions or the Office of Banking and
Financial Institutions, the Commissioner and the
Department may be substituted in place of the
Superintendent of the Office of Banking and Fi-
nancial Institutions or the Office of Banking and
Financial Institutions, respectively."

"(h) All employees of the Office of Banking and
Financial Institutions shall, upon June 9, 2001,
become employees of the Department and all
rights, benefits, seniority, and compensation of any
nature shall continue uninterrupted."

110

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-551.05

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 802 of Fiscal Year 2002 Budget Support
Emergency Act of 2001 (D.C. Act 14-124, August
3, 2001, 48 DCR 7861).

For temporary (90 day) amendment of section,
see § 2(b) of Consolidation of Financial Services
Emergency Amendment Act of 2004 (D.C. Act
15-381, February 27, 2004, 51 DCR 2653).
Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

For Law 14-213, see notes following
§ 26-131.02.

For Law 15-166, see notes following
§ 26-131.02.
Delegation of Authority

Delegation of Authority to Administer the Jun-
ior Super $avers Club Program, see Mayor's Order
2001-157, October 12, 2001 (48 DCR 9888); May-
or's Order 2001-158, October 12, 2001 (48 DCR
9890).
Miscellaneous Notes

Section 802 of D.C. Law 14-28 provides:

"Sec. 802. (a) All positions, personnel, property,
records, and unexpended balances of appropria-
tions, allocations, and other funds available or to
be made available to the Department of Consumer
and Regulatory Affairs for the operation and im-
plementation of An Act To regulate the business of
loaning money on security of any kind by persons,

firms, and corporations other than national banks,
licensed bankers, trust companies, savings banks,
building and loan associations, and real estate bro-
kers in the District of Columbia, approved Febru-
ary 4, 1913 (37 Stat. 657; D.C. Official Code
26-901 et seq.), Chapter 46 of Title ' 28 of the
District of Columbia Official Code, and Chapter 1
of Title 16 of the District of Columbia Municipal
Regulations (16 DCMR 100 et seq.), are hereby
transferred to the Department of Banking and
Financial Institutions, established by section 103 of
the 21st Century Financial Modernization Act of
2000, signed by the Mayor on January 26, 2001
(D.C. Act 13-597; 48 DCR 3244).

"(b) All of the functions assigned and authority
delegated to the Department of Consumer and
Regulatory Affairs concerning An Act To regulate
the business of loaning money on security of any
kind by persons, firms, and corporations other
than national banks, licensed bankers, trust com-
panies, savings banks, building and loan associa-
tions, and real estate brokers in the District of
Columbia, approved February 4, 1913 (37 Stat.
657; D.C. Official Code 26-901 et seq.), Chapter
46 of Title 28 of the District of Columbia Official
Code, and Chapter 1 of Title 16 of the District of
Columbia Municipal Regulations (16 DCMR 100 et
seq.), are hereby transferred to the Department of
Banking and Financial Institutions, established by
section 103 of the 21st Century Financial Modern-
ization Act of 2000, signed by the Mayor on Janu-
ary 26, 2001 (D.C. Act 13-597; 48 DCR 3244)."

§ 26-551.04. Appointment of the Commissioner of the Department of Banking
and Financial Institutions. [Repealed]

(June 9, 2001, D.C. Law 13-308, § 104, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(c), 51 DCR
2817.)

Historical and Statutory Notes

Emergency Act Amendments

For temporary (90 day) repeal of section, see
§ 2(c) of Consolidation of Financial Services Emer-
gency Amendment Act of 2004 (D.C. Act 15-381,
February 27, 2004, b\ DCR 2653).

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

For Law 15-166, see notes following
§ 26-131.02.

§ 26-551.05. General powers and responsibilities of the Commissioner.

(a) The Commissioner shall:

(1) Administer the District of Columbia Banking Code;

(2) Promote and maintain a climate and regulatory framework that will encourage
financial institutions to organize to do business in the District and contribute to the
economic development of the District through the increased availability of capital and
credit;

(3) Expand advantageous financial services to the public in a nondiscriminatory manner;

(4) Charter, regulate, supervise, and examine banks, savings institutions, credit unions,
trust companies, and other financial institutions engaged, or seeking to engage, in the
business of banking in the District;

(5) License, regulate, supervise, and examine non-depository financial institutions en-
gaged in regulated activity in the District;

111

§ 26-551*05 BANKS AND OTHER FINANCIAL INSTITUTIONS

(6) Regulate the opening or closing of branches, agencies, offices, or other facilities by
financial institutions under the authority and supervision of the Commissioner;

(7) Approve or disapprove mergers or acquisitions involving District financial institutions
or financial institution holding companies;

(8) Monitor community development commitments of financial institutions chartered,
organized, or doing business in the District;

(9) Approve or disapprove changes in control of financial institutions chartered or
organized in the District;

(10) Approve or disapprove conversions of federally-chartered institutions into District-
chartered financial institutions;

(11) Promulgate regulations, rules, policy statements, interpretations, and opinions nec-
essary or appropriate to carry out the purposes of the District of Columbia Banking Code;

(12) Assure that all financial institutions engaged in regulated activity in the District,
under the supervision or control of the Commissioner, or seeking to do business into the
District of Columbia under the District of Columbia Banking Code provide financial
services to the public in a manner that fosters the development and revitalization of housing
and commercial corridors in underserved neighborhoods in the District, help meet the
credit and deposit service needs of lower income and minority residents of the District, and
expand financial and technical support for small, minority, and women-owned businesses;

(13) Investigate possible violations of the District of Columbia Banking Code and take
any authorized action upon finding a violation;

(14) Examine or audit a financial institution, bank holding company, affiliate, or subsid-
iary to assure that the financial institution bank holding company, affiliate, or subsidiary is
operating in compliance with the law and in a manner that preserves safety and soundness;

(15) Request or pursue a restraining order, the appointment of a receiver or conservator,
the involuntary dissolution of a corporation, or the freezing or seizure of assets of a person
associated with a violation or possible violation of the District of Columbia Banking Code;

(16) In all respects permitted by law, act as the District government's regulatory
authority for financial institutions operating in the District; and

(17) Recommend to the Mayor annually, or at any other time, any necessary changes to
District laws dealing with banking or other areas within the jurisdiction of the Commission-
er.

(b) The Commissioner shall be responsible for the performance of all duties, the exercise of
all powers and jurisdiction, and the assumption and discharge of all responsibilities vested by
law in the Department or the Commissioner. The Commissioner shall have all powers
necessary or convenient for the administration and enforcement of the District of Columbia
Banking Code.

(c) The Commissioner may promulgate rules and regulations necessary or appropriate to
the execution of the Commissioner's powers, duties, and responsibilities.

(cl) The Commissioner may enter into agreements that the Commissioner considers neces-
sary or appropriate to the exercise of his or her powers, including agreements with agencies
or instrumentalities of the District, states and territories of the United States of America, or
the federal government, for the examination of banks, savings institutions, credit unions, trust
companies, and other financial institutions.

(e) The Commissioner, in the performance of the duties and responsibilities of the
Department, may enter into contracts with the Office of the Comptroller of the Currency, the
Office of Thrift Supervision, the National Credit Union Administration, the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation,
District agencies, other state or federal banking agencies, or any other entity, for those
services necessary to carry out the duties and responsibilities of the Commissioner and the
Department.

(f) The Commission may establish and modify fees to implement the District of Columbia
Banking Code.

(June 9, 2001, D.C. Law 13-308, § 105, 48 DCR 3244; Apr. 13, 2005, D.C. Law 15-354, § 35(b), 52 DCR
2638.)

112

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-551.07

Historical and Statutory Notes

Effect of Amendments No. 15-1130 which was referred to the Committee

D.C. Law 15-354, in subsec. (a)(12), substituted of the Whole. The Bill was adopted on first and

"Commissioner" for "Department of Banking and second readings on December 7, 2004, and Decern-

Financial Institutions". ber 2 l, 2004, respectively. Signed by the Mayor

Legislative History of Laws on February 9, 2005, it was assigned Act No.

For Law 13-308, see notes following 15-770 and transmitted to both Houses of Con-

§ 26-551.01. gress for its review. D.C. Law 15-354 became

Law 15-354, the "Technical Amendments Act of effective on April 13, 2005.
2004", was introduced in Council and assigned Bill

Subchapter III. Financial Institutions Advisory Board.

§ 26-551.06. Establishment of the Financial Institutions Advisory Board.

There is established a Financial Institutions Advisory Board ("Board"). The function of the
Board is advisory. The Board shall give the Commissioner sound and impartial advice on the
following matters:

(1) Applications by financial institutions, including international banking institutions, to
become chartered or organized under the District of Columbia Banking Code;

(2) Protection of the interests of depositors and shareholders in financial institutions
operating in the District;

(3) Protection of the interests of the general public related to the operation of financial
institutions in the District;

(4) Development and maintenance of a modern system of financial institutions in the
District; and

(5) Any other financial matter or matter concerning financial institutions operating in, or
affecting, the District.

(June 9, 2001, D.C. Law 13-308, § 106, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.07. Members of the Financial Institutions Advisory Board; compen-
sation.

(a) The Board shall be comprised of 15 members. The Mayor shall, with the advice and
consent of the Council, appoint 13 members to the Board. The Mayor shall appoint to the
Board a representative of a general banking industry association for the District; a represen-
tative of a general trade or commerce industry association; 2 certified public accountants; and
2 representatives of consumer interests. The Mayor shall appoint members who have a strong
interest in the District's financial institutions industry.

(b) The Commissioner of the Department shall be an ex-officio member of the Board.

(d) The term of an appointed member of the Board shall be 3 years; provided, that of the
first members appointed to the Board, 4 members shall be appointed to an initial term to end
one year after June 9, 2001, 4 members shall be appointed to an initial term to end 2 years
after June 9, 2001, and 5 members shall be appointed to an initial term to end 3 years after
June 9, 2001.

(e) At the end of the term of an appointed member, the appointed member may continue to
serve until a successor is confirmed.

(f) An appointed member of the Board shall be eligible for reappointment.

(g) A person appointed to complete the term of a departing member of the Board shall
serve for the unexpired term of the original appointment and until a successor is confirmed. A

113

§ 26-551.07 BANKS AND OTHER FINANCIAL INSTITUTIONS

person appointed to complete the term of a departing member of the Board may be
reappointed to one or more additional terms.

(h) A member of the Board, before assuming the duties of Board membership, shall take
and subscribe an oath to perform the duties of the office faithfully, impartially, and justly to
the best of the member's ability. A record of the oath shall be filed in the office of the Special
Assistant to the Mayor for Boards and Commissions.

(i) The Mayor may remove a member of the Board for failing to establish or maintain
District residency or for misconduct, neglect of duty, or other cause. If a member of the
Board is indicted for the commission of a felony, the member shall be automatically
suspended from serving on the Board; provided, that upon (1) a final determination of guilt,
or (2) a final determination of innocence or other termination of the proceeding without a
determination of guilt, the term of the Board member shall be automatically terminated or
reinstated, respectively.

(j) A member of the Board shall not receive compensation, but shall be entitled to
reimbursement for travel and incidental expenses.

(June 9, 2001, D.C. Law 13-308, § 107, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(d), 51 DCR
2817; Apr. 13, 2005, D.C. Law 15-354, § 35(c), 52 DCR 2638.)

Historical and Statutory Notes

Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 15-166, in subsec. (b), deleted "and the 15-381, February 27, 2004, 51 DCR 2653).

Commissioner of the Department of Insurance and Legislative History of Laws

Securities Regulation" following "Department". For Law !3_308, see notes following

D.C. Law 15-354, in subsec. (b), substituted "an § 26-551.01.

ex officio member" for "ex officio members". For Law 15 _1 66> see notes following

Emergency Act Amendments § 26-131.02.

For temporary (90 day) amendment of section, For Law 15-354, see notes following

see § 2(d) of Consolidation of Financial Services § 26-551.05.

§ 26-551.08. Organization and operation of the Board.

(a) The Board shall be organized, shall operate, and may establish committees under such
rules and bylaws as the Board establishes.

(b) The Board shall meet at least twice a year and at the call of the Commissioner.
(June 9, 2001, D.C. Law 13-308, § 108, 48 DCR 3244)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.09. Weight of advice of the Board.

If the Commissioner does not follow advice of the Board which is part of an official action of
the Board, the Commissioner shall send to the Board a written statement of the reason for
his or her decision not to follow the advice.

(June 9, 2001, D.C. Law 13-308, § 109, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

114

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-551.11

Subchapter IV. Investigation, Examination, and
Enforcement Powers of the Commissioner.

§ 26-551.10. Examinations of financial institutions.

(a) The Commissioner shall hire and commission examiners who shall have the authority to
examine any financial institution doing business in the District.

(b) In cooperation with the appropriate federal financial institutions agency, if any, the
Commissioner shall examine, or cause to be examined, each financial institution doing
business in the District at least once every 18 months. The examination shall analyze and
determine whether the financial institution is in a safe and sound condition and operating in a
safe and sound manner and shall monitor and determine the financial institution's compliance
with District and federal laws, regulations, and rules.

(c) The Commissioner may initiate a special examination of a financial institution whenever
the Commissioner considers it necessary to ensure that the financial institution is being
operated in a safe and sound manner and in compliance with District and federal laws,
regulations, and rules.

(d) The Commissioner shall assess a fee, to be paid by the financial institution, for the
expense of the examination under this section. The fee shall be determined as a percentage of
the assets of the examined financial institution.

(June 9, 2001, D.C. Law 18-308, § 110, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.11. Reports on financial institutions.

(a) Unless otherwise provided by the District of Columbia Banking Code, the Commission-
er shall require each financial institution to submit a financial report on a quarterly basis
("quarterly financial report"). The quarterly financial report shall fully describe the financial
condition of the reporting financial institution. The Commissioner may accept the most recent
quarterly report filed by the financial institution with its appropriate federal financial
institutions agency in the place of a quarterly financial report.

(b) A quarterly financial report shall be filed with the Commissioner within 30 days after
the end of each calendar quarter.

(c) The Commissioner may require a financial institution to submit a special financial
report if the Commissioner determines that a special financial report will assist the Commis-
sioner in ensuring the safe and sound condition and operation of the financial institution.

(d) A special financial report shall be filed with the Commissioner within 30 days of the
receipt of a request for the special financial report from the Commissioner.

(e) A quarterly financial report or a special financial report required under this section
shall be signed and certified as accurate by the president or chief executive officer of the
reporting financial institution.

(f) The Commissioner may accept a report, examination, or other information from a state
or federal agency or regulatory body concerning the activities of a financial institution or its
affiliate or subsidiary.

(g) The Commissioner shall prescribe forms to be used to comply with this section.
(June 9, 2001, D.C. Law 13-308, § 111, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

115

§ -26—551.12 BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-551.12. Initiation of formal investigation of a financial institution.

(a) If the Commissioner determines that a financial institution is engaging, has engaged, or
may engage in an unsafe or unsound practice in the operation of the financial institution
("unsafe or unsound practice"), or that the financial institutions is engaging, has engaged, or
may engage in a violation of a law, regulation, rule, condition, order, or request of the
Commissioner, or any written agreement entered into with the Commissioner ("violation"),
the Commissioner may conduct an investigation of the financial institution and issue and serve
upon the institution a notice of charges.

(b) The Commissioner may request that an investigation, or portion of an investigation, be
conducted by a District, state, or federal law enforcement agency.

(June 9, 2001, D.C. Law 13-308, § 112, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.13. Notice of charges; hearing; final order.

(a) The Commissioner shall formally initiate an investigation of a violation or an unsafe or
unsound practice by issuing a notice of charges. The notice of charges shall contain a
statement of facts describing the alleged violation or unsafe or unsound practice that the
financial institution or its subsidiary or affiliate has engaged, or may engage, in.

(b) The notice of charges shall set a date, time, and place at which a hearing shall be held
to determine whether the alleged violation or unsafe or unsound practice has occurred, or
may occur, and whether a cease and desist order should be issued against the financial
institution, or its subsidiary or affiliate. The hearing date shall be no earlier than 30 days, and
no later than 60 days, after the date of service of the notice of charges; provided, that the
hearing date may be set earlier or later if it is determined under rules issued by the
Commissioner that there are emergency circumstances or that it is impractical to hold the
hearing during the prescribed period.

(c) A hearing under this section shall be held in the District, unless otherwise specified by
the Commissioner, and shall be held before the Commissioner or a person that the
Commissioner appoints.

(d) The Commissioner may issue a subpoena to compel the attendance of a witness at a
hearing or to compel the production of any document, paper, book, record, or other evidence
for the investigation.

(e) The Commissioner or the Commissioner's appointee may administer an oath and take
the testimony of any person under oath in the conduct of the investigation.

(f) A hearing under this section shall be conducted in accordance with Chapter 5 of Title 2.

(g) A hearing conducted under this section shall be open to the public, unless the
Commissioner determines that it is necessary or appropriate to hold a private hearing to
protect the public interest.

(h) Within 90 days after the conclusion of a hearing under this section, the Commissioner
shall issue a final decision and order, in writing, and shall serve the final decision and order
on each party to the investigatory proceeding.

(June 9, 2001, D.C. Law 13-308, § 113, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

116

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-551.16

§ 26-551.14. Notification of other government agencies.

(a) If the Commissioner finds in the Commissioner's final order that a violation of the
District of Columbia Banking Code has occurred or is occurring, the Commissioner shall refer
the matter to the Corporation Counsel or to the United States Attorney for appropriate
action.

(b) If the Commissioner determines that a national bank, federally chartered savings and
loan, federally chartered savings bank, or federally chartered credit union has acted in
violation of the laws of the District or has engaged in an unsafe or unsound conduct, the
Commission shall notify the appropriate federal financial institutions agency and the United
States Attorney General.

(June 9, 2001, B.C. Law 13-308, § 114, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§26-551.15. Modification or rescission of orders.

The Commissioner may modify or rescind a final order issued under § 26-551.13 after
receiving and considering a request from a financial institution, a financial institution's
affiliate or subsidiary, or any other party to the investigatory proceeding, if the Commissioner
determines that:

(1) It is in the public interest to modify or rescind the final order; and

(2) It is reasonable to believe that the financial institution, the financial institution's
affiliate or subsidiary, or the other party to the investigatory proceeding will engage in safe
and sound practices and will comply with the District of Columbia Banking Code.

(June 9, 2001, D.C. Law 13-308, § 115, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§'26-551.01.

§ 26-551.16. Cease and desist order.

(a) The Commissioner may issue and serve upon the financial institution or its affiliate or
subsidiary a final cease and desist order if:

(1) The partv served with the notice of charges fails to appear at the hearing called
under § 26-551.13; or

(2) The record of the hearing held under § 26-551.13 supports a finding that the
violation or unsafe and unsound practice specified in the notice of charges has occurred or
reasonably likely to occur.

(b) A final cease and desist order may require that a financial institution or a director,
officer, trustee, employee, agent, affiliate, or subsidiary of the financial institution:

(1) Cease and desist from the violation or unsafe or unsound practice or from any
activity that wall or may result in a violation or unsafe or unsound practice;

(2) Take affirmative action to correct the violation, unsafe or unsound practice, or
condition resulting from the violation or unsafe or unsound practice or to avoid a violation
or unsafe or unsound practice; or

(3) Provide indemnification, reimbursement, restitution, or any other relief that the
Commissioner determines is appropriate.

(c) A final cease and desist order shall become effective 30 days after the service of the
order upon the financial institution or its affiliate or subsidiary; provided, that a final cease
and desist order which has been issued upon the consent of the Commissioner and a financial
institution or other parties shall become effective upon the date specified in the consent order.

117

§ 26-551,16 BANKS AND OTHER FINANCIAL INSTITUTIONS

(d) A final cease and desist order shall remain in effect until it is stayed, modified,
terminated, or set aside by the Commissioner or a court

(e) In addition to, or instead of, issuing a final cease and desist order, the Commissioner
may enter into an informal enforcement action, such as a supervisory agreement or memoran-
dum of understanding, with the financial institution.

(June 9, 2001, D.C. Law 13-308, § 116, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.17. Temporary cease and desist order.

(a) Along with a notice of charges, or after the issuance of a notice of charges, the
Commissioner may issue a temporary cease and desist order.

(b) The Commissioner may issue a temporary cease and desist order if the Commissioner
determines that a violation or unsafe or unsound practice is likely to cause:

(1) Insolvency of the financial institution;

(2) Substantial dissipation of assets or earnings of the financial institution;

(3) Serious weakening of the condition of the financial institution;

(4) Serious prejudice to the interests of the depositors or investors of the financial
institution or to the general public; or

(5) The inability to determine, because of incomplete or inaccurate records, the financial
condition of a financial institution or the inability to determine the details or purpose of a
transaction that may have a material effect on the financial condition of a financial
institution.

(c) The temporary cease and desist order may require a financial institution or its affiliate
or subsidiary to immediately cease and desist from a violation or unsafe or unsound practice
and to take affirmative action to prevent an occurrence set forth in paragraphs (1) through (5)
of subsection (b) of this section pending completion of investigatory proceedings under this
chapter. If a notice of charges issued under § 26-551.13 states that the books and records of a
financial institution are so incomplete or inaccurate that the Commissioner is unable to
determine the financial condition of the institution or to ascertain the details or purpose of a
transaction, the Commissioner may issue a temporary cease and desist order that requires
the financial institution to cease an activity or practice which caused or contributed to the
incomplete or inaccurate state of the books or records or take affirmative action to restore the
books or records to a complete and accurate state.

(d) A temporary cease and desist order shall be effective upon service.

(e) A temporary cease and desist order shall remain in effect until:

(1) Set aside, limited, or suspended by a court;

(2) The completion of the investigatory proceeding initiated by the notice of charges, if
the Commissioner dismisses the notice of charges;

(3) An order by the Commissioner revoking the temporary cease and desist order; or

(4) The issuance of a final cease and desist order.
(June 9, 2001, D.C. Law 13-308, § 117, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.18. Confidentiality of information.

(a) Except as provided in subsection (b) of this section or as otherwise required by law, the
Department and the employees, agents, and contractors of the Departments shall not
disclose:

118

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-551.20

(1) The contents of a report or examination of a person by the Department, except as the
Commissioner determines is appropriate to disclose in the final order issued under
§ 26-551.13;

(2) Information furnished to, or obtained by, the Department, the disclosure of which the
Commissioner determines could endanger the safety and soundness of a financial institu-
tion;

(3) Personal financial information furnished to, or obtained by the Department, except as
the Commissioner determines is appropriate to disclose in the final order issued under
§ 26-551.13.

(b) Notwithstanding subsection (a) of this section, the contents of a report or examination
of a person or information, including personal information, furnished to or obtained by the
Department may be disclosed:

(1) To employees, agents, and contractors of the Department in the performance of the
duties of the employee, agent, or contractor;

(2) To the directors, officers, and other persons authorized by the board of directors of a
financial institution or other entity, if the financial institution or other entity furnished the
information to the Department;

(3) To authorized and appropriate government agencies; or

(4) In accordance with a court order.
(June 9, 2001, D.C. Law 13-308, § 118, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.19. Enforcement of Department order, subpoena, or notice of

charges.

The Commissioner may, through the Corporation Counsel, apply to the Superior Court of
the District of Columbia for the enforcement of an effective and outstanding notice of charges,
subpoena, final cease and desist order, or temporary cease and desist order. The Superior
Court of the District of Columbia may order compliance with the notice of charges, subpoena,
final cease and desist order, or temporary cease and desist order.

(Jane 9, 2001, D.C. Law 13-308, § 119, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.20. Judicial review.

(a) Within 10 days after service of a temporary cease and desist order, a. financial
institution or other party named in the temporary cease and desist order may apply to the
Superior Court of the District of Columbia for an injunction to set aside, limit, or suspend the
order.

(b) A final order or a final cease and desist order issued under this chapter shall be
reviewable by the Superior Court of the District of Columbia. The review of the final order or
the final cease and desist order shall be confined to the record of the hearing conducted under
§ 26-551.13 and to a determination of whether the Commissioner's order was arbitrary or
capricious.

(June 9, 2001, D.C. Law 13-308, § 120, 48 DCR 3244.)

119

§ 26-551.20 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.21. Penalty for violation of final order.

A person who violates an outstanding and effective final order shall be guilty of a
misdemeanor and, upon conviction, shall be fined not more than $5,000, imprisoned not more
than one year, or both.
(June 9, 2001, D.C. Law 13-308, § 121, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

Subchapter V. Generally Prohibited Activities.

§26-551.22. Prohibition of fraud.

A financial institution shall not engage in a fraudulent activity or an act against the public
interest.

(June 9, 2001, D.C. Law 13-308, § 122, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

Subchapter VI. Miscellaneous Provisions.

§ 26-551.23. Rulemaking.

The Commissioner may issue rules implementing this chapter, pursuant to subchapter I of
Chapter 5 of Title 2.

(June 9, 2001, D.C. Law 13-308, § 123, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

§ 26-551.24. [Reserved]

§ 26-551.25. Validity of prior law.

A decision, order, interpretation, agreement, policy statement, opinion, regulation or rule
("decision") issued and in effect under a law repealed by this chapter or section 124 of the
21st Century Financial Modernization Act of 2000, effective June 9, 2001 (D.C. Law 13-308;
48 DCR 3244), shall continue to be valid until the Commissioner amends or withdraws the
decision.

(June 9, 2001, D.C. Law 13-308, § 125, 48 DCR 3244.)

120

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-603

Repealed
Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-551.01.

Chapter 6

Special Account for Office of Banking and
Financial Institutions [Repealed].

Section Section

26-602. Establishment of special account. [Re- 26-603. Fees credited to the special account.
pealed] [Repealecj]

§ 26-602. Establishment of special account. [Repealed]

(Mar. 20, 1998, D.C. Law 12-60, § 1803, 44 DCR 7378; Mar. 26, 1999, D.C. Law 12-175, § 1902(b), 45
DCR 7193; Apr. 20, 1999, D.C. Law 12-264, § 25, 46 DCR 2118; Apr. 13, 2005, D.C. Law 15-354, § 36, 52
DCR 2638.)

Historical and Statutory Notes

Legislative History of Laws

For Law 15-354, see notes following
§ 26-551.05.

§ 26-603. Fees credited to the special account. [Repealed]

(Mar. 20, 1998, D.C. Law 12-60, § 1804(1), 44 DCR 7378; Mar. 26, 1999, D.C. Law 12-175, § 1902(c), 45
DCR 7193; Apr. 3, 2001, D.C. Law 13-263, § 1411(a), 48 DCR 991; May 7, 2002, D.C. Law 14-132,
§§ 601(b), 602(a), 49 DCR 2551; Apr. 13, 2005, D.C. Law 15-354, § 36, 52 DCR 2638.)

Historical and Statutory Notes

Temporary Amendments of Section was adopted on first and second readings on No-
Section 2 of D.C. Law 14-86, the "Protections vember 8, 2000, and December 5, 2000, respective-
from Predatory Lending and Mortgage Foreclo- ly. Signed by the Mayor on December 21, 2000, it
sure Improvements Temporary Amendment Act of was assigned Act No. 13-552 and transmitted to
2001", effective March 19, 2002, provided that D.C. both Houses of Congress for its review. D.C. Law
Law 13-263 shall not apply beginning November 6, 13-263 became effective on April 3, 2001.
2001, through March 6, 2002. T . t - , tm c „ ,
ci i.- Aru\ x-t^^ t i a an -j ±1 j. ±1 Law 14-86, the Protections from Predatory
Section 4(b) of D.C. Law 14-86 provides that the T ,. -, l* , -^ , T ,
, -, „ . n, nor , ,. ", i ■ , ! Lending and Mortgage Foreclosure Improvements
act shall expire after 225 days of its having taken _ & . ° & , A , , n ^/
effect Temporary Amendment Act of 2001 , was mtro-
_. . . ' , duced in Council and assigned Bill No. 14-417,
Emergency Act Amendments which was referred to the Committee on Public
Section 2 of Act 14-188, the 'Protections from Works and the Environment The Bill was
Predatory Lending and Mortgage Foreclosure Im- ad fed on firgt ^ second readi on November
provements Emergency Amendment Act , deemed December 4, 2001, respectively. Ap-
approved Nov. 27, 2001, without the signature of ' . ' .^ , ^, . ' ' *\ , T J F
the Mayor, provided that D.C. Law 13-263 shall P^ved Without the signature of the Mayor ot
not apply beginning November 6, 2001, through December 21, 2001, it was assigned Act No. 14-206
March 6 2002 an( ^ transmitted to both Houses of Congress for its

review. D.C. Law 14-86 became effective on

March 19, 2002.

For temporary (90 day) amendment of section,
see § 601(b) of Home Loan Protection Emergency

Act of 2002 (D.C. Act 14-295, March 1, 2002, 49 Law 14-132, the "Home Loan Protection Act of

DCR 2534). 2002", was introduced in Council and assigned Bill

Legislative History of Laws No. 14-515, which was referred to the Committee

Law 13-263, the "Protections from Predatory on Consumer and Regulatory Affairs. The Bill

Lending and Mortgage Foreclosure Improvements was adopted on first and second readings on Feb-

Act of 2000", was introduced in Council and as- ruary 5, 2002, and February 19, 2002, respectively.

signed Bill No. 13-800, which was referred to the Signed by the Mayor on March 1, 2002, it was

Committee on Economic Development. The Bill assigned Act No. 14-296 and transmitted to both

121

§ 26-603
Repealed

Houses of Congress for its review. D.C
14-132 became effective on May 7, 2002.

BANKS AND OTHER FINANCIAL INSTITUTIONS

Law

For Law
§ 26-551.05.

15-354, see notes following

Chapter 6A
International Banking.

Section

26-631.

Definitions.

26-637.

26-632.

Construction of legal and financial terms
used in chapter.

26-638.

26-633.

Application of the District of Columbia
Banking Code.

26-639.

26-634.

Requirements for international banking

26-640.

corporation activities.

26-641.

26-635.

Scope of license; permissible activities of

international banking corporations.

26-642.

26-636.

Applications for licenses; approval or dis-

approval.

26-643.

Registered office and agent.

Assets to be held in the District of Co-
lumbia.

Financial certification; restrictions on in-
vestments, loans, and acceptances.

Reports and records.

Examinations; enforcement powers; fees
and assessments.

Voluntary dissolutions; involuntary disso-
lutions and liquidations.

Commissioner's powers; regulations.

§ 26-631. Definitions.

For the purposes of this chapter, the term:

(1) "Banking business" means activities and transactions involving banking, including
receiving deposits, paying checks, lending money, and any activity which is determined by
the Commissioner to be incidental to the business of banking.

(2) "Commissioner" shall have the same meaning as set forth in § 26-551.02(7).

(3) "Department" shall have the same meaning as set forth in § 26-551.02(9).

(4) "District of Columbia Banking Code" means the statutory provisions concerning
banking and financial institutions which are codified in Title 26 of the District of Columbia
Official Code, any law administered by the Commissioner, and rules and regulations
promulgated under those statutory provisions and law T s.

(5) "Edge Act" means the Federal Reserve Act, approved December 23, 1913 (38 Stat.
351; 12 U.S.C. § 221 et seq.\

(6) "Federal agency" means an agency of an international banking corporation estab-
lished and operating under the Federal International Act.

(7) "Federal branch" means a branch of an international banking corporation established
and operating under the Federal International Act.

(8) "Federal International Act" means the International Banking Act of 1978, approved
September 17, 1978 (92 Stat. 607; 12 U.S.C. § 3101 et seq.).

(9) "Federal international bank office" means a branch or agency of an international
banking corporation established and operating under the Federal International "ct.

(10) "Foreign country" means a country other than the United States, including a
dependency or possession of such country, and any territory of the United States, including
Guam, American Samoa, the Virgin Islands, and the Commonwealth of Puerto Rico.

(11) "International agency" means an office located in the District of Columbia, other
than a federal international bank office, which exercises powers, as set forth in § 26-635, on
behalf of an international banking corporation.

(12) "International banking corporation" means a banking corporation organized and
licensed under the laws of a foreign country. The term "international banking corporation"
shall include an international commercial bank, foreign merchant bank, foreign mortgage
bank, or other foreign institution that engages in banking activities in connection with the
business of banking in the country where the foreign institution is organized or operating.

(13) "International banking corporation office" means, unless otherwise specified, an
office established in the District of Columbia under this chapter.

(14) "International branch" means an office located in the District of Columbia, other
than a federal international bank office, which exercises powers, as set forth in § 26-635, on
behalf of an international banking corporation.

122

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-633

(15) "International financing corporation" means a corporation organized under the laws
of the District of Columbia for the purpose of engaging in the activities described in
§ 26-635.

(16) "International representative office" means:

(A) An office of an international banking corporation that is established or maintained
in the District of Columbia for the purpose of engaging in the activities described in
§ 26-635; or

(B) A person whose primary business is to engage in such activities, on behalf of an
international banking corporation, from an office located in the District of Columbia.

(17) "Representative" means a person or entity located in an office in the District of
Columbia that engages in any activity in the District of Columbia for or on behalf of an
international banking corporation, which activity is not otherwise prohibited by law.

(18) "State" means a state of the United States or the District of Columbia.

(Apr. 3, 2001, D.C. Law 13-268, § 2, 48 DCR 1251; June 11, 2004, D.C. Law 15-166, § 4(c), 51 DCR 2817.)

Historical and Statutory Notes

Effect of Amendments Legislative History of Laws

D.C. Law 15-166 rewrote pars. (2) and (3) which Law 13-268, the "International Banking Act of

had read as follows: 2000", was introduced in Council and assigned Bill

"(2) 'Commissioner' means the Commissioner of No - 13 " 866 ' which was referred to the Committee

the Department of Banking and Financial Institu- on Consumer and Regulatory Affairs and the Com-

£- ons mittee on Government Anairs, Recreation. The

Bill was adopted on first and second readings on

"(3) 'Department' means the Department of November 8, 2000, and December 5, 2000, respec-

Banking and Financial Institutions." tively- signed by the Mayor on January 5, 2001, it

Emergency Act Amendments was assigned Act No. 13-558 and transmitted to

For temporary (90 day) amendment of section, both Houses of Congress for its review. D.C. Law

see § 4(c) of Consolidation of Financial Services 13-268 became effective on April 3, 2001.

Emergency Amendment Act of 2004 (D.C. Act For Law 15-166, see notes following

15-381, February 27, 2004, 51 DCR 2653). § 26-131.02.

§ 26-632. Construction of legal and financial terms used in chapter.

Legal and financial terms used in this chapter refer to equivalent terms used by the
country in which the international banking corporation is organized.

(Apr. 3, 2001, D.C. Law 13-268, § 3, 48 DCR 1251.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-633. Application of the District of Columbia Banking Code.

(a) An international banking corporation having an office in the District of Columbia shall
be subject to all the provisions of the District of Columbia Banking Code as though the
international banking corporation is a bank organized under the laws of the District of
Columbia, except where it may appear, from the context or otherwise, that such provisions
are clearly applicable only to banks or trust companies organized under the laws of the
District of Columbia,

(b) An international banking corporation may conduct its banking business in the District
of Columbia with the same, but no greater, rights and privileges as a District of Columbia
bank, and except as otherwise provided in this chapter, subject to the same duties,
restrictions, penalties, and liabilities now or hereafter imposed under the District of Columbia
Banking Code upon a District of Columbia bank.

(Apr. 3, 2001, D.C. Law 13-268, § 4, 48 DCR 1251.)

123

§ 26-633 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-634. Requirements for international banking corporation activities.

(a) An international banking corporation may transact a banking business, or maintain in
the District of Columbia an office for carrying on such business, or any part thereof, if the
corporation has:

(1) Been authorized by its charter to carry on a banking business and has complied with
the laws of the jurisdiction in w r hich it is chartered;

(2) Furnished to the Department such proof as to the nature and character of its
business and as to its financial condition as the Department may require;

(3) Filed with the Department a certified copy of any information required to be supplied
to the District of Columbia by a foreign corporation under § 29-101.99; and

(4) Been licensed by the Department.

(b) An international banking corporation may engage in representational and other activi-
ties in the District of Columbia, other than those specified in § 26-635, only as authorized in
§ 26-636.

(c) Any person w T ho establishes or maintains an office or transacts business in the District
of Columbia in violation of this section shall be subject to the penalties imposed by
§ 26-103(g).

(Apr. 3, 2001, D.C. Law 13-268, § 5, 48 DCR 1251.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-635. Scope of license; permissible activities of international banking
corporations.

(a)(1) An international banking corporation licensed by the Commissioner may engage in
the business authorized by this chapter only at the office specified in the license. A license
issued under this chapter shall not be transferable or assignable; provided, that the location of
an international banking corporation office may be changed after notification of the Commis-
sioner as required by regulation. The license shall at all times be conspicuously displayed in
the place of business specified in the license.

(2) An international banking corporation licensed under this chapter shall, whenever its
articles of incorporation are amended, immediately file with the Commissioner a copy of the
amendment duly authenticated by the proper officer of the country under which the
international banking corporation was organized. The filing of the amendment shall not:

(A) Enlarge or alter the purpose for which the international banking corporation is
authorized to transact banking business or representational activities in the District of
Columbia;

(B) Authorize the international banking corporation to transact banking business or
representational activities in the District of Columbia in any other name than the name
set forth in its license; or

(3) An international banking corporation licensed under this chapter shall apply to the
Commissioner to secure an amended license if it changes its corporate name, changes the
duration of its corporate existence, or desires to pursue a different or additional purpose
which is not set forth in its prior application for a license. The requirements with respect to
the form and contents of the application, the manner of its execution, the filing of duplicate
originals of the application with the Commissioner, the issuance and effect of an amended
license, and the recording of the amended license shall be the same as in the case of an
original application for a license.

124

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-635

(4) An international banking corporation desiring to convert an existing international
banking corporation office to an international banking corporation office of a different type
shall submit to the Commissioner an application on a form that the Commissioner shall
prescribe, which application shall be accompanied by all of the information and documents
that are required for the license sought.

(5) Nothing in the laws of the District of Columbia shall restrict the right of a District of
Columbia-licensed international agency, international branch, or international financing
corporation to convert to a federal license or charter upon compliance with the laws of the
United States. Upon completion of any such conversion, the District of Columbia license
shall be surrendered to the Commissioner.

(6) An international banking corporation desiring to convert a federal international bank
office or corporation organized under section 25A of the Edge Act into an international
banking corporation office operating under the provisions of this chapter shall meet the
minimum criteria of the District of Columbia-chartered form into which it is converting.
(b)(1)(A) An international banking corporation that meets the requirements of § 26-634

may, with the approval of the Commissioner, establish one or more international branches in
the District of Columbia. An international branch shall have the same rights and privileges as
a bank organized under the District of Columbia Banking Code, including the right to receive
deposits and exercise fiduciary powers. The operations of an international branch shall be
conducted under regulations determined by the Commissioner as necessary to ensure
compliance with the provisions of the District of Columbia Banking Code. The regulations
shall include requirements for the maintenance of accounts and records separate from those
of the international banking corporation of which it is a branch. An application to establish an
international branch shall be made under § 26-636.

(B) An international banking corporation may operate more than one international

branch in the District of Columbia, each at a different place of business; provided, that

each branch office shall be separately licensed to transact a banking business, or any part

of a banking business, under this chapter.

(2)(A) An international agency licensed under this chapter may make any loan, extension
of credit, or investment which it could make if chartered and operating as a bank organized
under the laws of the District of Columbia.

(B) An international agency shall not receive deposits in the District of Columbia other
than:

(i) Deposits of a foreign nation, an agency or instrumentality of a foreign nation, or a
person who resides in, is domiciled in, and maintains its, or his or her, principal place
of business in, a foreign nation. For purposes of this subparagraph, the term "person"
means an individual, proprietorship, joint venture, partnership, trust, business trust,
syndicate, association, joint stock company, corporation, limited liability company, or
any other organization (or any branch or division thereof);

(ii) Interbank deposits, interbank borrowing, or similar interbank obligations; or
(hi) International banking facility time deposits as defined in § 47-1801.04(31).

(C) An international agency may maintain in the District of Columbia, for the account
of others, credit balances necessarily incidental to, or arising out of, the exercise of its
authority.

(D) Upon approval of an application by the Commissioner under § 26-636, an interna-
tional agency may act as a fiduciary and exercise trust powers subject to the same
requirements, and in the same manner, as the trust business of a District of Columbia
trust company or a District of Columbia bank with trust powers.

(E) An international banking corporation may operate more than one international
agency in the District of Columbia, each at a different place of business; provided, that
each agency office shall be separately licensed to transact a banking business or any part
of a banking business, under this chapter.

(c) Subject to the provisions of this chapter, an international representative office may act
in the District of Columbia in a liaison capacity with existing and potential customers of an
international banking corporation and its subsidiaries and affiliates. It may, through its
employees or agents, solicit loans; assemble credit information; make proprietary inspections
and appraisals; assist in completing loan applications and other preliminary paper-work in

125

§ 26-635 BANKS AND OTHER FINANCIAL INSTITUTIONS

preparation for making a loan; administer personnel and operations; engage in data process-
ing or recordkeeping activities; provide information to customers concerning their accounts;
answer questions; receive applications for extensions of credit and other banking services;
transmit documents on behalf of customers; make arrangements for customers to transact
business on their accounts; sendee loans or extensions of credit and investments; solicit, but
not accept, deposits; and engage in such other activities as the Commissioner may approve by
order or regulation. An international representative office may not conduct any banking
business, or part of a banking business, in the District of Columbia.

(d) An international banking corporation may, with the approval of the Commissioner
under the District of Columbia Banking Code, acquire control over or organize a bank
organized under the laws of the District of Columbia. For the purposes of this section, the
term "bank" shall have the same meaning as set forth in section 2(c) of the Bank Holding
Company Act of 1956, approved May 9, 1956 (70 Stat. 133; 12 U.S.C. § 1841(c)).

(e) A bank established by an international banking corporation and chartered outside the
District of Columbia may establish a branch in the District of Columbia; provided, that the
branch shall be subject to the same laws, rules, regulations, and oversight as a bank branch of
a domestic financial institution chartered outside the District of Columbia.

(f) An international banking corporation that has established a branch, agency, or repre-
sentative office outside the District of Columbia may establish and operate, directly or
indirectly, an international branch, an international agency, or an international representative
office in the District of Columbia in accordance with applicable District of Columbia law.

(g) An international financing corporation established under this chapter shall directly
engage only in those activities permissible for corporations organized under the Edge Act.
Subject to the prior approval of the Commissioner and to such limitations as the Commission-
er shall prescribe by regulation, the fact that an international financing corporation invests in
shares of, and owns or controls, an Edge Act corporation, an international banking corpora-
tion, or a company engaged in financial activities outside the United States, or establishes and
operates branches, representative offices, and similar banking facilities in foreign countries,
shall not prohibit their operation in the District of Columbia.

(h) This chapter shall not be construed to prohibit an international banking corporation
which does not maintain an office in the District of Columbia from transacting the following
business:

(1)(A) Making loans in the District of Columbia secured by mortgages on real property;
or

(B) Contracting in the District of Columbia with a banking institution engaged in the
business of banking under the laws of the District of Columbia to acquire from or
through such banking institution a part or the entire interest in:

(i) A loan or evidence of debt which such banking institution has made, purchased,

or acquired, or will make, purchase, or acquire, for its own account or otherwise; and

(ii) A like interest in any security and any security instrument proposed to be given,

or previously or subsequently given, to secure or evidence such loan or evidence of

debt;

(2) Enforcing in the District of Columbia obligations previously or subsequently acquired
by it in the transaction of business outside the District of Columbia or in the transaction of
business authorized by this section; or

(3) Acquiring, holding, leasing, mortgaging, contracting with respect to, or otherwise
protecting or conveying property in the District of Columbia previously or subsequently
assigned, transferred, mortgaged, or conveyed to it as security for, or in whole or part
satisfaction of, a loan made by it or an obligation acquired by it in the transaction of
business outside the District of Columbia or in the transaction of business authorized by
this section.

(Apr. 3, 2001, D.C. Law 13-268, § 6, 48 DCR 1251; Oct. 19, 2002, D.C. Law 14-213, § 17, 49 DCR 8140.)

126

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-636

Historical and Statutory Notes

Effect of Amendments For Law 14-213, see notes following

D.C. Law 14-213, in subsec. (b)(2)(B)(iii), vali- § 26-131.02.
dated a previously made technical correction.
Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-636. Applications for licenses; approval or disapproval.

(a)(1) Before being licensed by the Commissioner to transact a banking business in the
District of Columbia as an international branch or international agency or before maintaining
in the District of Columbia an office to carry on a banking business, or any part of a banking
business, an international banking corporation shall submit to the Commissioner a separate
application, in duplicate, which shall state:

(A) The name of the corporation and the country under the laws of which it was
organized;

(B) The date of its incorporation and the period of its duration;

(D) The address of its proposed registered office in the District of Columbia and the
name of its proposed registered agent in the District of Columbia at such address;

(E) The names of other states and countries in which it is licensed or qualified to
transact business;

(F) The names and respective addresses of its directors and principal officers;

(G) Such information as the Commissioner may require indicating that the internation-
al banking corporation is authorized to conduct a general banking business under the
laws of the country of its organization and the nature of the business of the international
banking corporation;

(H) A complete and detailed statement of its financial condition and the actual value of
its assets;

(I) A listing of any occasion within the preceding 10-year period in which the

international banking corporation or any of its directors, executive officers, or principal

shareholders has been convicted of, or pleaded guilty or nolo contendere to, any offense:

(i) With respect to which the penalties include the possibility of imprisonment for

one year or more;

(ii) Involving money laundering; or

(iii) Otherwise related to the operation of a financial institution; and
(J) Such additional information as the Commissioner may require as necessary or
appropriate to enable the Commissioner to determine whether the international banking
corporation is entitled to a license.

(2) The application shall be accompanied by a reasonable fee determined by the
Commissioner, made on forms prescribed and furnished by the Commissioner, and duly
executed in duplicate by one or more of the principal officers of the international banking
corporation.

(3) When the application is submitted to the Commissioner, the international banking
corporation shall also:

(A) Submit a duly authenticated copy of its articles of incorporation, or equivalent
corporate document, and an authenticated copy of its bylaws, or an equivalent of the
bylaws, that is satisfactory to the Commissioner;

(B) Pay an investigation and supervision fee, which shall be established by regulation;
and

(C) Submit a statement or certificate issued by the banking or supervisory authority of
the country in which the international banking corporation is organized and licensed,
stating that the international banking corporation is duly organized, licensed, in good
standing, and authorized to conduct a general banking business.

(4) The Commissioner may approve or disapprove the application; provided, that the
Commissioner shall not approve the application unless, in the Commissioner's opinion, (A)

127

§ 26-636 BANKS AND OTHER FINANCIAL INSTITUTIONS

the applicant meets every requirement of this chapter and any regulations adopted under
this chapter, and (B) federal law permits the appropriate federal regulatory authority to
issue a comparable license to the international banking corporation. In acting on an
application, the Commissioner shall consider the financial and managerial resources and
future prospects of the applicant and the international branch or agency and the conven-
ience and needs of the community to be served. The Commissioner may specify conditions
that the Commissioner considers appropriate, considering the public interest, the need to
maintain a sound and competitive banking system, and the preservation of an environment
conducive to the conduct of an international banking business in the District of Columbia.
(5) A license shall not be issued to an international banking corporation for the purpose
of operating an international agency or an international branch in the District of Columbia,
unless the international banking corporation:

(A) Has been authorized by the bank regulatory authority, in the foreign country in
which the international banking corporation is organized or incorporated, to establish the
proposed international branch or agency;

(B) Is adequately supervised by the central bank or bank regulatory agency in the
foreign country in which it is organized and chartered. The Commissioner shall establish,
by regulation, the general principles which shall determine the adequacy of supervision of
an international banking corporation's foreign establishments, taking into consideration
the standards set forth in the Federal International Act;

(C) Holds capital consistent with minimum capital requirements established by the
Commissioner by regulation. In adopting such requirements, the Commissioner shall
consider similar rules adopted by other bank regulatory agencies in the United States
and the need to provide reasonably consistent regulatory requirements for international
banking corporations which will maintain a safe and sound condition of international
banking corporations doing business in the District of Columbia; and

(D) As of a date not more than 120 days before the application, has assets with a fair
market value of $1 million greater than its liabilities.

(b)(1) Before being licensed by the Commissioner to transact business in the District of
Columbia as an international bank representative office, an international banking corporation
shall subscribe and submit to the Commissioner a separate application, in duplicate, which
shall contain such corporate organizational, financial, and other information as the Commis-
sioner determines to be appropriate, taking into consideration the information required to be
submitted with regard to applications for international branches and agencies as set forth in
this chapter.

(2) The application for a license shall be accompanied by a reasonable fee as determined
by the Commissioner.

(3) The Commissioner shall issue a license to an international banking corporation to
establish and maintain a representative office if the Commissioner determines that:

(A) The international banking corporation is of sound financial standing;

(B) The international banking corporation has been authorized by the bank regulatory
authority of the foreign country in which it was organized or incorporated to establish the
proposed international bank office or the regulatory authority interposes no objection to
the office;

(C) The international banking corporation is adequately supervised by the central
bank or bank regulatory agency in the foreign country in which it is organized and
chartered;

(D) The management of the international banking corporation and the proposed
management of the representative office are adequate; and

(E) The convenience and needs of persons to be served by the proposed representative
office will be promoted.

(4) An international banking corporation desiring to convert its existing registered
international representative office to a licensed international branch or licensed internation-
al agency shall submit an application to the Commissioner which meets the minimum
criteria for licensing of an international branch or licensed international agency as required
by this chapter.

128

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-637

(c) An application for approval to organize an international financing corporation shall be
subject to the provisions of the District of Columbia Banking Code relating to the organiza-
tion of new financial institutions and to regulations adopted by the Commissioner as
necessary to ensure that the proposed international financing corporation will be operated in
a safe and lawful manner; provided, that the applicant shall not be required to become a
member of the Federal Reserve System or the Federal Deposit Insurance Corporation. An
international financing corporation shall be subject to the examination and supervision of the
Commissioner and subject to the District of Columbia Banking Code to the same extent as
international banking corporations under § 26-633.

(d) An application filed under this section shall be subject to the application review
procedures contained in § 26-704(a), (b), and (g).

(e) The Commissioner shall submit an annual report to the Council of all actions that the
Commissioner takes pursuant to this section.

(Apr. 3, 2001, D.C. Law 13-268, § 7, 48 DCR 1251; Dec. 11, 2007, D.C. Law 17-59, § 2, 54 DCR 10718.)

Historical and Statutory Notes

Effect of Amendments Section 5(b) of D.C. Law 17-31 provides that the

D.C. Law 17-59 rewrote subsec. (d) and added act sha11 ex P ire after 225 days of its having taken

subsec. (e). Prior to amendment, subsec. (d) read effect.

as follows: Emergency Act Amendments

"(d) An application filed under this section shall For temporary (90 day) amendment of section,

be subject to the application review procedures, see § 2 of Bank Charter Modernization Emergen-

including Council review, contained in § 26-704(a), c ^ Amendment Act of 2007 (D.C. Act 17-66, July 9,

(b), and (f) through (i)." 2007 > 54 DCR 6819 >-

Temporary Amendments of Section Legislative History of Laws

„ \. n . ^^ r ir . 01 , , , For Law 13-268, see notes following § 26-631.

Section 2 of D.C. Law 17-31 amended subsec. T ^ 1 ttT% , ^ j ° 1

(d) and added subsec. (e) to read as follows: A La ^ 1 '-^ the £ , Bank Charter Modernization

Amendment Act of 2007 , was introduced in Coun-

"(d) An application filed under this section shall dl and assigned B ill No. 17-166 which was re-
be subject to the application review procedures ferred to the Committee on Public Services and
contained in section 5(a), (b), and (g) of the District Consumer Affairs. The Bill was adopted on first
of Columbia Regional Interstate Banking Act of and second readings on j u ] y i 0; 2007, and October
1985, effective November 23, 1985 (D.C. Law 6-63; 2 , 2007, respectively. Signed by the Mayor on
D.C. Official Code § 26-704(a), (b), and (g)). October 17, 2007, it was assigned Act No. 17-133

"(e) The Commissioner shall submit an annual and transmitted to both Houses of Congress for its

report to the Council of all actions that the Com- review. D.C. Law 17-59 became effective on De-

missioner takes pursuant to this section." cember 11, 2007.

§ 26-637. Registered office and agent.

(a) An international banking corporation authorized to establish and maintain a banking-
office in the District of Columbia shall have and continuously maintain:

(1) A registered office in the District of Columbia which may, but shall not be required
to, be the same as its place of business; and

(2) A registered agent, which agent may be either an individual residing in the District of
Columbia whose business office is identical with the registered office or a corporation
authorized to transact business in the District of Columbia having a business office identical
with the registered office.

(b) A registered agent may at any time vacate its office as registered agent by filing with
the Commissioner a statement setting forth its resignation and the effective date thereof,
which shall not be less than 60 days nor more than 90 days after the date of filing. A copy of
the statement shall be served on the international banking corporation by registered or
certified mail addressed to the international banking corporation at its principal office, as such
is known to the resigning agent, and directed to the attention of the secretary or other
comparable officer of the international banking corporation within 5 days after the date of the
filing.

(c) An international banking corporation may from time to time change the address of its
registered office and shall change its registered agent if the office of the registered agent

129

§'26-637 BANKS AND OTHER FINANCIAL INSTITUTIONS

becomes vacant for any reason, if its registered agent becomes disqualified or incapacitated to
act, or if it revokes the appointment of its registered agent. A change of registered office or
registered agent may be effected by filing with the Commissioner duplicate originals of a
statement setting forth the details with respect to the change and the effective date thereof.

(d) Service of process in a suit, action, or proceeding, or service of a notice or demand
required or permitted by law to be served on an international banking corporation, may be
made on a licensed international banking corporation by serving the registered agent of the
international banking corporation. If a licensed international banking corporation fails to
appoint or maintain a registered agent upon whom legal process or a notice or demand may
be served, the registered agent cannot with reasonable diligence be found at the registered
office of the international banking corporation, or the license of an international banking-
corporation is revoked, the Commissioner shall be irrevocably authorized as the agent and
representative of the international banking corporation to accept service of process or a notice
or demand required or permitted by law to be sewed on the international banking corpora-
tion. Service on the Commissioner of any process, notice, or demand for the international
banking corporation shall be made by delivering to and leaving with the Commissioner, or
with any official having charge of the Department, duplicate copies of the process, notice, or
demand. If any process, notice, or demand is served on the Commissioner, the Commissioner
shall immediately forward a copy by registered mail to the international banking corporation
at its principal office as the same appears on the Department's records. Nothing in this
chapter shall limit or affect the right to serve any process, notice, or demand required or
permitted by law to be served upon a foreign corporation in any other manner now or
hereafter permitted by law. The Commissioner shall keep a record of all process, notices, and
demands served upon the Commissioner under this section, setting forth the time of service
and the Commissioner's action on the service.
(Apr. 3, 2001, D.C. Law 13-268, § 8, 48 DCR 1251; June 19, 2001, D.C. Law 13-313, § 25, 48 DCR 1873.)

Historical and Statutory Notes

Effect of Amendments No. 13-879, which was referred to the Committee

D.C. Law 13-313, ■ in subsec. (d), deleted the on the Whole. The Bill was adopted on first and

former fifth sentence which read: "Service on the second readings on December 5, 2000, and Decem-

Commissioner shall be returnable in not less than ber 19, 2000, respectively. Signed by the Mayor

30 days." on j anuary i9 ? 2001, it was assigned Act No.

Legislative History of Laws 1 3__5 74 ancl transmitted to both Houses of Con-

For Law 13-268, see notes following § 26-631. gress for its rev iew. D.C. Law 13-313 became

Legislative History of Laws effective on June 19, 2001.
Law 13-313, the "Technical Amendment Act of

2000", was introduced in Council and assigned Bill

§ 26-638. Assets to be held in the District of Columbia.

(a) Upon and after establishing an international branch or international agency in the
District of Columbia, and as may be required under regulations adopted by the Commission-
er, an international banking corporation licensed under this chapter shall keep on deposit,
with such banks as the international banking corporation may designate and the Commission-
er may approve, dollar deposits or other assets, including securities. The Commissioner may
from time to time require that the assets deposited under this subsection be maintained by
the international banking corporation in such amount, and in such form and subject to such
conditions as the Commissioner considers necessary or desirable for the maintenance of a
sound financial condition, the protection of depositors and the public interest, and the
confidence in the business of each branch or agency.

(b) An international banking corporation shall hold in the District of Columbia currency or
such other assets as the Commissioner shall, by regulation, permit, in an amount which shall
be a percentage, determined by the Commissioner by order or regulation, of the liabilities of
the international banking corporation. As used in this subsection, the term "liabilities" means
liabilities appearing on the books, accounts, or records of an international banking corpora-
tion's international agencies and international branches in the District of Columbia as
liabilities, including acceptances and such other items as the Commissioner shall determine,
but excluding amounts due, and other liabilities, to other offices, agencies, or branches of, and

130

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-639

affiliates of, the international banking corporation. For purposes of this subsection, the
Commissioner (1) shall value marketable securities at the lower of their principal amount or
market value, (2) may determine the value of a nonmarketable bond, note, debenture, draft,
bill of exchange, other evidence of indebtedness, or of any other asset or obligation held by, or
owed to, the international banking corporation or its agencies or branches within the District
of Columbia, and (3) in determining the ratio of assets to liabilities, may exclude, in whole or
in part, any particular asset. If, by reason of the existence or potential occurrence of unusual
and extraordinary circumstances, the Commissioner considers it necessary or desirable for
the maintenance of a sound financial condition, the protection of depositors, creditors, and the
public interest, and to maintain public confidence in the business of an international agency or
international branch of an international banking corporation in the District of Columbia, the
Commissioner may, subject to such terms and conditions as the Commissioner may prescribe,
require the international banking corporation to deposit the assets required to be held in the
District of Columbia under this subsection with such banks as the Commissioner may
designate.

(Apr. 3, 2001, D.C. Law 13-268, § 9, 48 DCR 1251.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-639. Financial certification; restrictions on investments, loans, and ac-
ceptances.

(a) Before opening an office in the District of Columbia, and annually thereafter so long as
a banking office is maintained in the District of Columbia, an international banking corpora-
tion licensed under this chapter shall certify to the Commissioner the amount of its paid-in
capital, its surplus, and its undivided profits, each expressed in the currency of the country of
its organization. The dollar equivalent of this amount, as determined by the Commissioner,
shall be considered to be the amount of its capital, surplus, and undivided profits.

(b)(1) The Commissioner shall, by regulation, prescribe the limits of drafts or bills of
exchange which an international agency or branch may accept relative to the capital account
of the international banking corporation. The limits shall take into account all transactions
which are included and excluded in computing the lending limit for acceptances of a federal
international bank office.

(2) Except to the extent they are inconsistent with this chapter, the provisions of the
District of Columbia Banking Code shall apply to the loans and investments made by an
international bank agency or international branch of the international banking corporation.
With respect to an international banking corporation and its international bank agencies or
international branches, a reference in those provisions to capital, capital account, or similar
terms shall refer to the capital account of the international banking corporation, and, except
when used with reference to the capital account, a reference in those provisions to the term
"bank" shall refer to the international agencies and branches of the international banking
corporation which are licensed in the District of Columbia.

(3) Any limitation in this chapter based on the capital account of an international banking
corporation shall refer, with respect to an international agency or international branch in
the District of Columbia, to the dollar equivalent of the capital account of the international
banking corporation, as determined by the Commissioner. If the international banking
corporation has more than one international agency or international branch in the District
of Columbia, the business transacted by all agencies or branches shall be aggregated in
determining compliance with a limitation or restriction.

(Apr. 3, 2001, D.C. Law 13-268, § 10, 48 DCR 1251.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

131

§ 26-640 BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-640. Reports and records.

(a) An international banking corporation that maintains one or more international banking
corporation offices or an international financing corporation under this chapter shall, at the
times and in the form prescribed by the Commissioner, file written reports in the English
language for such offices or corporation with the Commissioner under the oath of one of its
officers, managers, or agents transacting business in the District of Columbia, showing the
amount of its assets and liabilities and containing any other matters required by the
Commissioner.

(b) An international banking corporation that maintains 2 or more international banking
corporation offices may consolidate the information in one report unless the Commissioner
requires otherwise for purposes of the Commissioner's supervision of the condition and
operations of each office. The late filing of the reports shall be subject to the imposition of an
administrative penalty prescribed by regulation. If an international banking corporation shall
fail to file a report as directed by the Commissioner, or if a report shall contain any false
statement knowingly made, it shall be grounds for revocation of the license of the internation-
al banking corporation.

(c) The Commissioner shall, by regulation, prescribe the circumstances under which the
Commissioner may require an international banking corporation to use internal or external
auditors to address significant supervisory concerns with respect to the operations of an
international branch or agency licensed in the District of Columbia.

(d) An international banking corporation which operates an agency or branch licensed
under this chapter shall maintain, at a location accepted by the Commissioner:

(1) Correct and complete books and records of account of the business operations
transacted by the office, including accounts and records (A) reflecting all transactions
effected by, or on behalf of, the branch or agency, (B) reflecting all actions taken in the
District of Columbia by employees of the office located in the District of Columbia to effect
transactions on behalf of an office of the international banking corporation located outside
the District of Columbia, and (C) relating to any other matters concerning the branch or
agency that the Commissioner may require. All policies and procedures governing the
operations of the office and any existing general ledger or subsidiary accounts shall be
maintained in the English language. The Commissioner may require that any other
document not written in the English language which the Commissioner considers necessary
for the purposes of its regulatory and supervisory functions be translated into English at
the expense of the international banking corporation. The books, accounts, and records
shall be preserved for at least 3 years; provided, that preservation by photographic
reproduction or records in photographic form shall constitute compliance with the require-
ments of this section; and

(2) Current copies of the charter and bylaws of the international banking corporation
relating to the operations of the office, minutes of the proceedings of its directors, officers,
or committees relating to the business of the office, and minutes of the proceedings of its
directors, officers, or committees relating to the business of the office. The records shall be
kept as required by paragraph (1) of this subsection and shall be made available to the
Commissioner, upon request, at any time during regular business hours of the office. The
failure to keep records as required or a refusal to produce the records upon request by the
Commissioner shall be grounds for suspension or revocation of a license issued under this
chapter.

(e) In addition to any other reports it may be required to file, an international banking
corporation which maintains an international agency or international branch in the District of
Columbia shall file reports with the Commissioner in form and at such times as the
Commissioner prescribes, by regulation, concerning the management, asset quality, capital
adequacy, and liquidity of the international banking corporation.

(f) An international banking corporation that maintains a representative office in the
District of Columbia licensed under this chapter shall make, maintain, and preserve at the
office or at such other place as determined by the Commissioner, such books, accounts, and
other records relating to the activities conducted at the office as the Commissioner may

132

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-641

require. An international banking corporation which is licensed to establish and maintain a
representative office shall file the reports accompanied by a reasonable fee, as required and
determined by the Commissioner.

(g) The Commissioner may require such regular or special reports as the Commissioner
considers necessary for the proper supervision of licensees. The additional reports shall be in
the form prescribed by the Commissioner and shall be subscribed and affirmed as true under
penalty of perjury.

(h) If an international banking corporation shall fail to make a report as directed by the
Commissioner, it shall be subject to the penalties prescribed by regulation. A false statement
contained in a report, in any other sworn statement made to the Commissioner by such
report, or in any other sworn statement made to the Commissioner by the international
banking corporation under the provisions of this chapter shall constitute perjury.
(Apr. 3, 2001, D.C. Law 13-268, § 11, 48 DCR 1251.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-641. Examinations; enforcement powers; fees and assessments.

(a)(1) The Commissioner may make such public or private investigations or examinations
inside or outside the District of Columbia concerning an international banking corporation
licensed to maintain an international branch, international agency, or international represen-
tative office in the District of Columbia, as the Commissioner considers necessary to carry out
the duties of the Commissioner relating to the international branch, international agency, or
international representative office.

(2) For the purpose of an investigation, examination, or proceeding under this section,
the Commissioner may administer oaths and affirmations, subpoena witnesses, compel
attendance of witnesses, take evidence, require written statements, and require the
production of records relating to the activities of the branch, agency, or representative
office which the Commissioner considers relevant or material. The Commissioner may
require that certified copies of any records be provided to the Commissioner at the
Commissioner's office.

(3) The international banking corporation which is the subject of an investigation,
examination, or proceeding shall:

(A) Make its records relating to the activities of the branch, agency, or representative
office available to the Commissioner in readable form;

(B) Provide necessary personnel and equipment, including assistance in the analysis of
computer-generated records;

(D) Furnish unrestricted access to all areas of its principal place of business in the
District of Columbia or wherever the applicable records may be located; and

(E) Otherwise cooperate with the Commissioner.

(4) Upon application of the Commissioner, a court of competent jurisdiction may issue to
a person refusing to obey a subpoena issued under this section an order requiring that the
person appear before the Commissioner, or any officer designated by the Commissioner, to
produce the records ordered or to give evidence concerning the matter under investigation
or in question. The failure to obey the order of the court may be punished by the court as a
contempt of court.

(5) An international banking corporation licensed to maintain an international branch,
international agency, or international representative office in the District of Columbia shall
pay the Commissioner the actual cost of any examination of the licensee, as such cost is
determined by the Commissioner. Failure by the licensee to pay such cost within 30 days of
receipt of demand from the Commissioner shall automatically suspend the license until the
costs are paid.

(6) For the purposes of this section, the term "records" include, books; papers; corre-
spondence; memoranda; agreements; diaries; logs; notes; ledgers; journals; visual, audio,

133

§ 26-641 BANKS AND OTHER FINANCIAL INSTITUTIONS

machine-readable, magnetic, or electronic recordings; computer printouts and software; and
any other documents.

(b)(1) Upon a finding that an international banking corporation or its international agency,
international branch, or international representative office subject to this chapter may be
acting in an unsafe or unsound manner or in violation of a District of Columbia Banking Code
law, rule, regulation, or written condition, or is otherwise engaging in conduct that may be
grounds for the issuance of a cease and desist order under the District of Columbia Banking
Code, the Commissioner may issue a cease and desist order or take any other action
authorized under the District of Columbia Banking Code.

(2) (A) The Commissioner may suspend or revoke a license issued to an international
banking corporation under this chapter for any reason which would be sufficient grounds
for the Commissioner to deny an application for the license. The Commissioner may also
suspend or revoke a license if the Commissioner finds that the licensee or any director,
officer, partner, controlling shareholder, trustee, employee, agent, or representative of the
licensee has: (i) made any material misstatement in the application, or (ii) violated or failed
to comply with any of the provisions of this chapter applicable to the licensee or any of the
regulations or orders of the Commissioner under this chapter. The Commissioner may
prescribe, by regulation, additional conditions or standards under which the license of an
international agency, international branch, or international representative office may be
suspended or revoked.

(B) The Commissioner may, for good cause shown, suspend a license for a period not
exceeding 30 days, pending investigation.

(D) A licensee may surrender a license by delivering to the Commissioner written
notice that it thereby surrenders the license, but the surrender shall not affect the
licensee's civil or criminal liability for acts committed before the surrender.

(E) A license shall remain in force and effect until it shall have been surrendered,
revoked, or suspended in accordance with the provisions of this chapter. The Commis-
sioner may reinstate a suspended license or issue a new license to a licensee whose
license shall have been revoked if an original application for the license could be
approved.

.(F) If the Commissioner revokes or suspends a license issued under this chapter, a
written order of revocation or suspension shall be immediately executed in duplicate. The
Commissioner shall file one copy in his or her office and shall immediately serve the
other copy upon the licensee.

(G) If a license is surrendered by an international banking corporation or is suspended
or revoked by the Commissioner, all rights and privileges of the international banking
corporation under the license shall immediately cease. If the license is suspended or
revoked, it shall be surrendered to the Commissioner within 24 hours after the written
order has been mailed by the Commissioner to the registered office of the international
banking corporation as it appears on the records of the Department, or has been
personally delivered to an officer, director, employee, or agent of the international
banking corporation who is physically present in the District of Columbia. The Commis-
sioner shall prescribe, by regulation, procedures for the orderly cessation of business by
an international banking corporation in a manner which is not harmful to the interests of
its customers or of the public.
(3) The Commissioner may, at his or her discretion, take possession of the business and

property in the District of Columbia of an international banking corporation as provided in

this chapter.

(c) The Commissioner may establish, by regulation, such fees as the Commissioner
determines are appropriate for applications and documents filed with the Commissioner
under this chapter. Upon written notice by the Commissioner of the total amount of such
assessment, the licensee shall become liable for, and shall pay, the assessment to the
Commissioner.

(Apr. 3, 2001, D.C. Law 13-268, § 12, 48 DCR 1251.)

134

BANKS AND OTHER FINANCIAL INSTITUTIONS §-26-642

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-642. Voluntary dissolutions; involuntary dissolutions and liquidations.

(a) An international banking corporation that proposes to terminate the operation in the
District of Columbia of an international branch, an international agency, or an international
representative office in the District of Columbia shall comply with all procedures as the
Commissioner may prescribe, by regulation, to ensure an orderly cessation of activities in a
manner that is not harmful to the public interest and shall surrender its license to the
Commissioner or its right to maintain an office in the District of Columbia, as applicable.

(b)(1) If an international banking corporation licensed to maintain an international branch,
an international agency, or an international representative office in the District of Columbia is
dissolved or its authority or existence is otherwise terminated or canceled in the jurisdiction
of its incorporation, the international banking corporation shall deliver, within 10 days
thereafter, to the Commissioner a certificate of the official responsible for records of banking
corporations of the jurisdiction of incorporation of the international banking corporation
attesting to the occurrence of this event or a certified copy of an order or decree of a court of
the jurisdiction directing the dissolution of the international banking corporation, the termi-
nation of its existence, or the cancellation of its authority. The filing of the certificate, order,
or decree shall have the same effect as the revocation of the license of the international
banking corporation as provided in this chapter. The Commissioner shall serve as agent of the
international banking corporation upon whom process may be served in an action based upon
a liability or obligation incurred by the international banking corporation within the District
of Columbia before the filing of the certificate, order, or decree. The Commissioner shall
promptly cause a copy of the process to be mailed by registered or certified mail, return
receipt requested, to the international banking corporation at its office address as it appears
on the records of the Department.

(2) (A) The Commissioner may, at the Commissioner's discretion, take possession of the
business and property in the District of Columbia of a international banking corporation
that has been licensed to operate in the District of Columbia upon finding that (i) the
corporation's international branch or agency operating in the District of Columbia has
violated any law, (ii) has neglected or refused to comply with the terms of a duly issued
order of the Commissioner, (iii) is insolvent, will imminently become insolvent, or is
transacting business in an unsound, unsafe, or unauthorized manner such that the corpora-
tion is threatened with imminent insolvency, or (iv) the corporation is in liquidation at its
domicile or elsewhere. Title to the business and property shall vest by operation of law in
the Commissioner upon taking possession. Thereafter, the Commissioner shall liquidate or
otherwise deal with such business and property in accordance with the provisions of this
chapter and any other laws relating to the liquidation of banking corporations within the
District of Columbia.

(B)(i) Upon the Commissioner's taking possession of the business and property in the
District of Columbia of the banking office of an international banking corporation whose
deposit liabilities in the District of Columbia are not insured by the Federal Deposit
Insurance Corporation, the amounts deposited under this chapter shall become the
property of the Commissioner, free and clear of any and all liens and other claims, and
shall be held in trust for the depositors of such banking office. The Commissioner may,
without regard to any priorities, preferences, or adverse claims and without obtaining the
approval of a court, sell the property and, as soon as practicable, distribute the proceeds
to the depositors on a pro rata basis; provided, that no depositor shall receive an amount
in excess of his account balance.

(ii) For purposes of this subparagraph, the term "depositor" shall not include any
other office or branch of, or a w 7 holly-owTied (except for a nominal number of directors'
shares) subsidiary of, the international banking corporation, but shall include a person
to whom such banking office is indebted by virtue of money or its equivalent received
by the banking office for which it has:

135

§ 26-642 BANKS AND OTHER FINANCIAL INSTITUTIONS

(I) Given credit, or is obligated to give credit, to a time or demand deposit or
which is evidenced by a check or draft against a deposit account and certified by the
banking office;

(II) Issued a letter of credit for cash or a traveler's check on which the banking
office is primarily liable; or

(III) Issued an outstanding draft (including advice or authorization to charge the
banking office's balance at another bank), cashier's check or money order, or other
officer's check.

(Apr. 3, 2001, D.C. Law 13-268, § 13, 48 DCR 1251.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

§ 26-643. Commissioner's powers; regulations.

(a) The Commissioner shall have all of the powers granted to the Commissioner under the
District of Columbia Banking Code to the extent appropriate to enable the Commissioner to
supervise an international banking corporation office of an international banking corporation
holding a license to maintain the office.

(b) The Commissioner may promulgate, in addition to, and not inconsistent with, this
chapter, general rules, regulations, and definitions and specific rulings, demands, and findings
as the Commissioner may consider necessary for the proper conduct of the business
authorized and licensed under, and for the enforcement of, this chapter.

(Apr. 3, 2001, D.C. Law 13-268, § 14, 48 DCR 1251.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-268, see notes following § 26-631.

Chapter 7
Interstate Banking and Branching.

Subchapter I. Regional Interstate Banking. Section

26-704. Review of applications.
Section 26-706.01. Alternative entry by acquisition.

26-701. Definitions. [Repealed] 26 " 71L Use of women-owned banks.

26-702.01. Duties; Council review of rules 26_712 - Administrative procedure; cease and

desist orders.

Subchapter I. Regional Interstate Banking.
§ 26-701. Definitions. [Repealed]

(Nov. 23, 1985, D.C. Law 6-63, § 2, 32 DCR 5954; Apr. 11, 1986, D.C. Law 6-107, § 2(a), 33 DCR 1168;
Apr. 30, 1988, D.C. Law 7-104, § 27(a), 35 DCR 147: Mar. 16, 1989, D.C. Law 7-187, § 2(a), 35 DCR
8648; Aug. 17, 1991, D.C. Law 9-42, § 2(a), 38 DCR 4981; June 9, 2001, D.C. Law 13-308, § 124, 48 DCR
3244.)

Historical and Statutory Notes

Legislative History of Laws

For D.C. Law 13-308, see notes following
§ 26-551.03.

136

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-702.01

§■26-702.01. Duties; Council review of rules

(a) Repealed;

(b) The Superintendent shall:

(1) Administer this subchapter;

(2) Promote a climate in which financial institutions will organize to do business in the
District and contribute to the economic development of the District through the increased
availability of capital and credit;

(3) Expand advantageous financial services to the public in a nondiscriminatory manner;

(4) Charter and regulate banks, savings banks, savings companies, trust companies, or
other financial institutions seeking to establish, in accordance with § 26-101, an office or
banking house located within the District where deposits or savings are received;

(5) Regulate, to the extent provided in § 26-1301, companies which are formed for the
purpose of carrying on any 1 of the following 3 classes of business in the District:

(A) A safe deposit, trust, loan, and mortgage business;

(B) A title insurance, loan, and mortgage business; or

(6) Charter and regulate building associations, building and loan associations, and
savings and loan associations which are formed within the District for the purpose of
carrying on the activities described in § 26-204;

(7) Regulate the branching or opening of additional offices by financial institutions under
the supervision of the Superintendent;

(8) Regulate the institutions described in paragraphs (4), (5), and (6) of this subsection to
the same extent that these financial institutions were regulated by the Office of the
Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and
the Federal Home Loan Bank Board prior to April 11, 1986, and in a manner that promotes
safe and sound financial practices;

(9) Promote and maintain, to the extent possible, an economic climate and regulatory
framework that will encourage financial institutions to organize to do business in the
District of Columbia;

(10) Upon confirmation, administer, to the extent provided in this subchapter, the
provisions of this subchapter concerning interstate banking;

(11) Assure that all financial institutions under the supervision or control of the Office of
Banking and Financial Institutions and all banks and bank holding companies seeking entry
into the District of Columbia under the interstate banking provisions in this subchapter
provide financial services to the public in a manner that fosters the development and
revitalization of housing and commercial corridors in underserved neighborhoods in the
District, helps meet the credit and deposit service needs of lower income and minority
residents of the District, and expands financial and technical support for small, minority,
and women-owned businesses;

(12) In all respects permitted by law, act as the District government's regulatory
authority for financial institutions operating in the District;

(13) Establish fees not otherwise established by act, and, from time to time, increase the
fees established by act;

(14) Issue rules necessary to carry out the purposes of this subchapter;

(15) Receive and investigate complaints or initiate an investigation in regard to a possible
violation of this subchapter or § 26-103 ("Banking Business Act");

(16) If an investigation warrants, examine, which may include an audit, a person who
may act as a bank to assure that the person acts in compliance with the law or examine,
which may include an audit, a District of Columbia ("District") banking corporation
chartered by the Superintendent and the banking corporation's affiliate or subsidiary to
assure that the bank, affiliate, or subsidiary operates in compliance with the law and in a
manner that preserves the safety and soundness of the bank, affiliate, or subsidiary;

(17) Inform any other District or federal agency with an interest that an investigation is
ongoing;

137

§ 26-702.01 BANKS AND OTHER FINANCIAL INSTITUTIONS

(18) If an investigation warrants, hold a hearing, issue a subpoena to compel the
attendance of a witness, administer an oath, and take the testimony of any person under
oath in regard to any violation or possible violation of this subchapter or § 26-103;

(19) If an investigation warrants, issue a subpoena to compel the production of any
document, paper, book, record, or other evidence in regard to any violation or possible
violation of this subchapter or § 26-103;

(20) Issue a cease and desist order related to any violation or possible violation of this
subchapter or § 26-103 pursuant to § 26-712;

(21) Pursue, through the Office of the Corporation Counsel, the obtaining of a restrain-
ing order, the appointment of a receiver, the involuntary dissolution of a corporation/or the
freezing or seizure of assets of a corporation or person related to a violation or possible
violation of this subchapter or § 26-103 pursuant to § 26-712; and

(22) Submit an annual report to the Council of all actions that the Commissioner takes
pursuant to this section,

(b-1) The Superintendent shall, upon a finding of a violation of this subchapter or
§ 26-103, refer the matter to the Corporation Counsel or United States Attorney for civil or
criminal enforcement, as the case may warrant.

(c) All rules which the Superintendent issues pursuant to this subchapter shall be transmit-
ted to the Council for a 45-day review period, excluding Saturdays, Sundays, holidays, and
days when Council is in recess. The Council may adopt a resolution disapproving the rules,
in whole or in part, within the 45-day review period. If the Council, by resolution, does not
approve or disapprove the rules before the expiration of the 45-day review period, the rules
shall become effective at the expiration of the 45-day review period.

(d)(1) Until a Superintendent is appointed and confirmed pursuant to this section, all duties
and responsibilities of the Superintendent concerning the chartering of new financial institu-
tions under § 26-704(a) shall be performed by the Mayor, or his or her designee.

(2) During any period the Mayor, or his or her designee, is performing the duties and
responsibilities of the Superintendent, the Mayor, or his or her designee, may enter into
contracts with the Office of the Comptroller of the Currency, the Board of Governors of the
Federal Reserve System, the Federal Deposit Insurance Corporation, the Federal Home
Loan Bank Board, or any other entities, for those services necessary to carry out the duties
and responsibilities of the Superintendent.

(Nov. 23, 1985, D.C. Law 6-63, § 3a, as added Apr. 11, 1986, D.C. Law 6-107, § 2(b), 33 DCR 1168; Aug.
17, 1991, D.C. Law 9-42. § 2(b), 38 DCR 4981; Feb. 5, 1994, D.C, Law 10-68, § 25(a), 40 DCR 6311; Apr.
13, 2005, D.C. Law 15-354, § 37, 52 DCR 2638; Mar. 2, 2007, D.C. Law 16-191, § 48(b), 53 DCR 6794;
Dec. 11, 2007, D.C. Law 17-59, § 3(a), 54 DCR 10718; Mar. 25, 2009, D.C. Law 17-353, § 220, 56 DCR
1117.)

Historical and Statutory Notes
Effect of Amendments D.C. Law 17-59, in subsec. (b), deleted "; and"

D.C. Law 15-354, in the section heading, substi- from the end of par. (20), substituted "; and" for a
tuted "duties" for "Establishment of the Office of period at the end of par. (21), and added par. (22).

Banking and Financial Institutions; Superinten- r\ n i ir7 ow VJ , , . , ,

j 4.» , i i a i / \ i,- -L i, a a D.C Law 17-353 validated a previously made

dent ; and repealed subsec. (a) which had read as ^ , . , ^. „ v

follows- technical correction m subsec. (b).

"(a)(1) The Office of Banking and Financial In- Temporary Amendments of Section

stitutions is established and shall be under the Section 3(a) of D.C. Law 17-31, in subsec.
direction of the Superintendent of Banking and (b)(20), substituted a semicolon for "; and" at the
Financial Institutions. end of the para g Tap h; in subsec. (b)(21), substitut-
"(2) The Mayor shall appoint the Superinten- ed "; and" for a period at the end of the para-
dent, with the advice and consent of the Council, graph; and added subsec. (b)(22) to read as fol-
for a term of 4 years, except that the first term of lows*
the Superintendent shall terminate on January 1,
1987. " "(22) Submit an annual report to the Council of

"(3) No person shall exercise the duties of the a11 |f ions . tha J the Commissioner takes pursuant

Superintendent in an acting capacity for more than to ^ 1S sec tion.
120 days." ' Section 5(b) of D.C. Law 17-31 provides that the

D.C. Law 16-191, in the section heading, valid at- act shall expire after 225 days of its having taken

ed a previously made technical correction. effect.

138

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-704

Emergency Act Amendments transmitted to both Houses of Congress for its

For temporary (90 day) amendment of section, review. D.C. Law 16-191 became effective on

see § 3(a) of Bank Charter Modernization Emer- March 2, 2007.

gency Amendment Act of 2007 (D.C. Act 17-66, ^ T 1r7 cn , f ,, . Q na ror

July 9, 2007, 54 DCR 6819). For Law 17 " 59 ' see notes follo ™ n g § *>-636.

Legislative History of Laws ^ aw 17-353, the "Technical Amendments Act of

For Law 15-354, see notes following 2008", was introduced in Council and assigned Bill

§ 26-551.05. No. 17-994 which was referred to the Committee

Law 16-191, the "Technical Amendments Act of of the ^^ The Bil1 was adopted.. on first and

2006", was introduced in Council and assigned Bill second readings on December 2, 2008, and Decem-

No. 16-760, which was referred to the Committee ber 16 > 2008 > respectively. Signed by the Mayor

of the whole. The Bill was adopted on first and on January 15, 2009, it was assigned Act No.

second readings on June 20, 2006, and July 11, 17-687 and transmitted to both Houses of Con-

2006, respectively. Signed by the Mayor on July gress for its review. D.C. Law 17-353 became

31, 2006, it was assigned Act No. 16-475 and effective on March 25, 2009.

§ 26-704. Review of applications.

(a) Any person who conducts or seeks to conduct a class of business described in
§ 26-702.01 (b)(4), (5), or (6) in the District shall file an application with the Superintendent
for approval to do business in the District, unless the person is already chartered by the
appropriate federal or District agency or organized by virtue of the laws of any of the states
of this Union and doing business pursuant to § 26-103(a)(l). Consistent with applicable
federal law, all the applications, including any supporting documents, and any other informa-
tion required to be submitted to the Superintendent shall be made available to the public. An
application filed with the appropriate federal agency for approval to conduct a class of
business described in § 26-702. 01(b)(4), (5), or (6) and still pending approval or approved
prior to April 11, 1986, shall not be subject to this section or the provisions of this subchapter.
The Council shall file comments regarding the applications pending April 11, 1986. Any
Council comments regarding a pending application filed prior to April 11, 1986, shall meet the
requirements of the preceding sentence.

(b) Upon the filing of a complete application pursuant to subsection (a) of this section, the
following procedures shall apply:

(1)(A) The Superintendent shall prepare a periodic bulletin listing all pending applica-
tions. The bulletin shall be published in the District of Columbia Register and shall be
mailed without charge to any person upon request.

(B) Prior to deciding whether to grant approval of the application, the Superintendent
shall accept public comment on the application and shall hold a public hearing on the
application, according to procedures established by the rules issued by the Superinten-
dent.

(2) The Commissioner shall either approve or disapprove the application and explain the
reasons for the decision. An application required by this section shall not be complete
unless it is accompanied by an application fee in an amount to be established by the
Commissioner and made payable to District of Columbia Treasurer. An entity for which
deposit insurance is required shall not commence operations until the applicant has
submitted evidence that the deposit insurance has been acquired.

(3) Repealed.

(4) Repealed.

(5) Repealed.

(6) No applicant shall commence business until its application is considered approved.

(c) Any authority granted to acquire any District bank holding company or District bank
shall be contingent on the review and approval of the Commissioner as provided in this
subsection. Upon the filing of a complete application, the following procedures shall apply:

(1)(A) A regional bank holding company that seeks to acquire a District bank holding
company or a District bank, or a nonregional bank holding company that seeks to acquire a
District bank holding company or a District bank pursuant to § 26-706.01, shall file a copy
of the complete draft of the application required to be filed with the Federal Reserve Board
for approval of an acquisition in accordance with 12 U.S.C. § 1842. An applicant may file
an application with the Federal Reserve Board at any time subsequent to filing the draft

139

§ 26-704 BANKS AND OTHER FINANCIAL INSTITUTIONS

application with the Superintendent. No application required by this section shall be
complete unless it is accompanied by an application fee in the amount of $4,000.
(B) Repealed.

(2) The Commissioner shall either approve or disapprove the application and explain the
reasons for the decision. The Commissioner shall consider:

(A) The financial and managerial resources of the bank holding company;

(B) The future prospects and stability of the subsidiaries of the bank holding company
and the bank whose assets or shares the bank holding company seeks to acquire;

(D) The adequacy of the bank holding company's community development program;
and

(E) Whether the acquisition may result in undue concentration of resources or
substantial decrease of competition in the District.

(3) Repealed.

(4) Repealed.

(5) Repealed.

(6) The Commissioner shall submit a copy of the approval or disapproval to the Federal
Reserve Board.

(7) Repealed.

(8) The Commissioner shall submit to the Council:

(A) A quarterly report of any applications filed or decisions reached by the Commis-
sioner pursuant to this section; and

(B) An annual report of all actions that the Commissioner takes pursuant to this
section.

(d) Where not inconsistent with federal law:

(1) Each application filed pursuant to this section shall, where appropriate, include
information applicable to the nature of the application, the applicant's general plan of
business, the applicant's proposed capital investment in the District, and a community
development program.

(2) The community development program shall set forth the applicant's plan to:

(A) Assist in the development of economically disadvantaged and underserved neigh-
borhoods in the District;

(B) Assist in meeting the credit and deposit service needs of low- and moderate-
income and minority District residents;

(D) Market the community development program and publicize the community devel-
opment program to the applicant's employees and to individuals and businesses located in
areas which the applicant will serve.

(3) To the extent considered appropriate, the Superintendent shall require that an
applicant provide the following information:

(A) A description of the local community, including low- and moderate-income neigh-
borhoods where the applicant intends to provide credit and services and from which the
applicant intends to draw deposits or customers, business services which the applicant
will offer to low- and moderate-income persons throughout the District, a description of
these low- and moderate-income persons, and a description of the banking services which
the applicant will offer at a minimum cost to these persons. The applicant shall state its
agreement to cash checks issued by the District and the United States governments at
bank offices within target banking development areas, even though the bearer of the
check does not maintain an account at the bank. According to normal and prudent
banking practices, the bank may verify that the individual who presents the check at the
bank office is legally entitled to payment;

(B) A description of the applicant's intended dividend policies;

(D) A description of the applicant's loan policy, including the loan rates and the
percentage of the total loans which will be made in low- and moderate-income areas.

140

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-704

For the purposes of determining compliance with the requirements of this subsection,
loans may include permanent mortgage financing for the purchase and rehabilitation of 1
to 4 unit owner-occupied buildings, or multi-family residential buildings, home improve-
ment loans for single-family homes, and interim loans for construction or rehabilitation,
or projects qualifying for permanent financing. For the purposes of determining
compliance with the requirements of this subsection, the applicant may also offer FHA
insured and VA guaranteed mortgage financing, including FHA Title 1 home improve-
ment loans, blanket and share loans for the purchase and rehabilitation of cooperatively
owned residential properties, loans made pursuant to programs established under
§ 47-848, or a similar homesteading program established by the District of Columbia
government, participation with nonprofit developers of housing, term loans for small,
minority or women-owned businesses for building construction, building improvement,
inventory and fixed asset financing, and working capital;

(E) A description of any technical assistance that the applicant will offer to individuals
and businesses in low- and moderate-income areas;

(F) A description of the applicant's plans to use District-based minority firms to meet
the applicant's procurement needs, including goods and professional services;

(G) A description of the applicant's plans to cooperate with the District of Columbia's
Department of Employment Services to identify potential District resident employees for
the applicant's District offices, and a description of applicant's plans to assure the
retention of existing jobs held by District residents;

(H) A description of the applicant's plans to designate a senior lending officer to
review specifically the needs of small, minority, or women-owned businesses and commu-
nity development organizations;

(I) A description of the applicant's plans to use its best efforts to increase the number
of minority and female representatives on the applicant's board of directors and on the
board of any of the applicant's District-based subsidiaries, and a description of applicant's
plans to establish a training program for employees at all levels of the bank's and bank
holding company's operations;

(J) A description of the applicant's plans for branching or opening new offices, and,
where appropriate, a description of how those plans will aid the applicant in achieving the
objectives of the community development program;

(K) A description of the applicant's plans to sell food coupons, pursuant to 7 U.S.C.
§ 2011 et seq., in bank offices located in the District;
(L) Any other information that the Superintendent considers appropriate; and
(M) The applicant's agreement to submit an annual report to the Commissioner and
the Council updating any information submitted to the Commissioner with regard to the
community development program.
(e)(1) If a bank holding company filing an application for review pursuant to this section
has made in connection with that application any express written commitments to the
Superintendent with respect to subjects set forth in subsection (d) of this section, the
Superintendent may, at any time, review the activities of the bank holding company and of its
District bank subsidiaries to determine whether the bank holding company has fulfilled the
express written commitments. The Superintendent may require a bank holding company
that has made the express written commitments and its District bank subsidiaries to supply
the information and to submit the reports the Superintendent considers necessary in order to
make a determination under this subsection.

(2) Upon the determination of the Superintendent that a bank holding company has
failed to fulfill express written commitments that the bank holding company made with
respect to subjects set forth in subsection (d) of this section, the Superintendent may order
the bank holding company to take steps to comply with all the commitments within a
reasonable period of time.

(3) If the Superintendent believes at any time that a bank holding company subject to an
order issued under paragraph (2) of this subsection has failed to comply with the order
within the period specified in the order, the Superintendent may conduct a hearing in
accordance with § 2-509, on the issue of whether the bank holding company has fulfilled
any express written commitments that the bank holding company made with respect to
subjects set forth in subsection (d) of this section,

141

§ 26-704

BANKS AND OTHER FINANCIAL INSTITUTIONS

(4) If, after a hearing as specified in paragraph (3) of this subsection, the Superintendent
determines that a bank holding company has failed to fulfill express written commitments
that the bank holding company made with respect to subjects set forth in subsection (d) of
this section, the Superintendent may order the bank holding company to divest itself of
control of all District banks and District bank holding companies within a reasonable period
of time. If the Superintendent orders a bank holding company to divest itself of control of
all District banks and bank holding companies pursuant to this subsection, the divestiture
shall, in all events, be completed within 1 year after the date on which the Superintendent's
order becomes final and not pending further review.

(5) The Superintendent's decision in a case initiated under paragraph (3) of this
subsection shall be subject to judicial review by the District of Columbia Court of Appeals
pursuant to § 2-510.

(6) The Superintendent shall initiate any case under paragraph (3) of this subsection on
the issue of whether a bank holding company has failed to fulfill express written commit-
ments that the bank holding company made with respect to subjects set forth in subsection
(d) of this section within 4 years of the date of acquisition of the District bank or District
bank holding company in connection with which the bank holding company made the
express written commitments.

(f) Repealed.

(g) Repealed,
(h) Repealed.
(i) Repealed.

(Nov. 23, 1985, D.C. Law 6-63, § 5, 32 DCR 5954; Apr. 11, 1986, D.C. Law 6-107, § 2(c), 33 DCR 1168;
Feb. 24, 1987, D.C. Law 6-192, § 10, 33 DCR 7836; Apr. 30, 1988, D.C. Law 7-104, § 27(b), 35 DCR 147;
Mar. 15, 1990, D.C. Law 8-84, § 2, 37 DCR 44; Mar. 15, 1990, D.C. Law 8-91, § 2, 37 DCR 776; Aug. 17,
1991, D.C. Law 9-42, § 2(c), 38 DCR 4981; Dec. 11, 2007, D.C. Law 17-59, § 3(b), 54 DCR 10718.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 17-59, in subsec. (b), rewrote par. (2)
and repealed pars. (3) to (5); in subsec. (c), re-
wrote the lead-in language, par. (2), and par. (6),
and repealed par. (1)(B) and (3) to (5), and added
par. (8); rewrote subsec. (d)(3)(M); in subsec.
(e)(1), deleted "or the Council" following "Superin-
tendent"; and repealed subsecs. (f) to (i). Prior to
amendment, subsecs. (b)(2) to (5), lead-in language
of subsec. (c), subsecs. (c)(1)(B), (2) to (7),
(d)(3)(M), (f) to (i), read as follows:

"(2) The Superintendent shall make either a fa-
vorable or unfavorable recommendation on the ap-
plication and explain the reasons for the Superin-
tendent's recommendation, and shall transmit to
the Council the Superintendent's recommendation,
a copy of the application, and any other relevant
information or submissions within 90 days after
receipt of the application. The Superintendent may
extend this 90-day period for up to an additional 60
days. No application required by this section shall
be complete unless it is accompanied by an applica-
tion fee in an amount to be established by the
Superintendent and made payable to the D.C.
Treasurer. No entity for which insurance is re-
quired shall commence operations until the appli-
cant has submitted evidence that the insurance has
been acquired.

"(3) The Council may adopt a resolution disap-
proving the Superintendent's recommendation
within 45 days, excluding Saturdays, Sundays, holi-

days, and days when the Council is in recess, after-
receipt of the Superintendent's recommendation.

"(4) If the Council fails to adopt a resolution
disapproving the Superintendent's recommenda-
tion within the 45-day period, the Superintendent's
recommendation shall be considered approved.

"(5) If the Council adopts a resolution rejecting
the recommendation of the Superintendent, the
Council shall transmit the resolution to the Super-
intendent within 10 days after its adoption and the
following procedures shall apply:

"(A) If the Superintendent has made an unfa-
vorable recommendation on the application, the
application is considered approved.

"(B) If the Superintendent has made a favorable
recommendation on the application, the application
is considered disapproved.

"(c) Any authority granted to acquire any Dis-
trict bank holding company or District bank shall
be contingent on the review of the Superintendent
and Council as provided in this subsection. Upon
the filing of a complete application, the following
procedures shall apply:"

"(B) Until the Superintendent is appointed and
confirmed in accordance with § 26-702.01, applica-
tions for acquisitions by regional and nonregional
bank holding companies shall be reviewed in accor-
dance with the standards set forth in both this
subchapter and the procedures set forth in this
section, and in the District of Columbia Regional
Interstate Banking Act of 1985 Amendments Act

142

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-704

of 1985, except that the period for submission and
review of applications shall commence 45 days,
excluding Saturdays, Sundays, holidays, and days
of Council recess, before filing with the Federal
Reserve Board.

"(2) The Superintendent shall make either a fa-
vorable or unfavorable recommendation on the ap-
plication and explain the reasons for the recom-
mendation, and shall transmit to the Council the
recommendation, a copy of the application, and any
other relevant information or submissions within
60 days from the date of receipt of the application.
The Superintendent shall consider the financial
and managerial resources of the bank holding com-
pany, the future prospects and stability of the
subsidiaries of the bank holding company and the
bank whose assets or shares the bank holding
company seeks to acquire, the financial history of
the bank holding company or its subsidiary, the
adequacy of the community development program,
and whether the acquisition may result in undue
concentration of resources or substantial decrease
of competition in the District.

"(3) 'The Council may adopt a resolution disap-
proving the Superintendent's recommendation
within 45 days, excluding Saturdays, Sundays, holi-
days, and days when the Council is in recess, after
receipt of the Superintendent's recommendation.

"(4) If the Council fails to adopt a resolution
disapproving the Superintendent's recommenda-
tion within the 45-day period, the Superintendent's
recommendation shall be considered approved.

"(5) If the Council adopts a resolution disap-
proving the recommendation of the Superinten-
dent, the Council shall transmit the resolution to
the Superintendent within 10 days after adoption
of the resolution and the following procedures shall
apply:

"(A) If the Superintendent has made a favorable
recommendation on the application, the application
is considered disapproved.

"(B) If the Superintendent has made an unfa-
vorable recommendation on the application, the
application is considered approved.

"(6) The Superintendent shall submit a copy of
the final recommendation to the Federal Reserve
Board.

"(7) The applicant shall include a copy of the
Superintendent's final recommendation with its ap-
plication to the Federal Reserve Board."

"(M) The applicant's agreement to submit an
annual report to the Superintendent and the Coun-
cil updating any information submitted to the Su-
perintendent and the Council with regard to the
community development program."

"(f) Any applicant which files an application with
the Superintendent pursuant to this section shall
also file, on the same day, a notification copy of the
application with the Council.

"(g) Nothing in this section shall prohibit the
applicant from resubmitting to the Superintendent
a disapproved application. Any resubmitted appli-

cation shall be considered in accordance with the
procedures set forth in this section.

"(h) The Council shall hold a public hearing or
public roundtable on each application transmitted
to the Council by the Superintendent pursuant to
this section or § 26-706.01.

"(i) The Superintendent may issue rules provid-
ing for emergency circumstances under which ap-
plications may be exempted from the Council re-
view requirement of this subchapter, if the Council
has not disapproved the rules pursuant to
§ 26-702.01."
Temporary Amendments of Section

Section 3(b) of D.C. Law 17-31, in subsec. (b),
repealed pars. (3) to (5) and amended par. (2) to
read as follows:

"(2) The Commissioner shall either approve or
disapprove the application and explain the reasons
for the decision. No application required by this
section shall be complete unless it is accompanied
by an application fee in an amount to be estab-
lished by the Commissioner and made payable to
the District of Columbia Treasurer. No entity for
which deposit insurance is required shall com-
mence operations until the applicant has submitted
evidence that the deposit insurance has been ac-
quired."

; in subsec. (c), amended the lead-in text to read
as follows: "Any authority granted to acquire any
District bank holding company or District bank
shall be contingent on the review and approval of
the Commissioner as provided in this subsection.
Upon the filing of a complete application, the fol-
lowing procedures shall apply:", repealed pars.
(1)(B), (3) to (5), and (7), and amended pars. (2)
and (6) and added par. (8) to read as follows:

"(2) The Commissioner shall either approve or
disapprove the application and explain the reasons
for the decision. The Commissioner shall consid-
er:

"(A) The financial and managerial resources of
the bank holding company;

"(B) The future prospects and stability of the
subsidiaries of the bank holding company and the
bank whose assets or shares the bank holding-
company seeks to acquire;

"(C) The financial history of the bank holding
company or its subsidiary;

"(D) The adequacy of the bank holding compa-
ny's community development program; and

"(E) Whether the acquisition may result in un-
due concentration of resources or substantial de-
crease of competition in the District."

"(6) The Commissioner shall submit a copy of
the approval or disapproval to the Federal Reserve
Board."

"(8) The Commissioner shall submit to the
Council:

"(A) A quarterly report of any applications filed
or decisions reached by the Commissioner pursu-
ant to this section; and

143

§ 26-704 BANKS AND OTHER FINANCIAL INSTITUTIONS

"(B) An annual report of all actions that the Emergency Act Amendments

Commissioner takes pursuant to this section." For temporary (90 day) amendment of section,

; amended subsec. (d)(3)(M) to read as follows: see § 3(b) of Bank Charter Modernization Emer-

"(M) The applicant's agreement to submit an gency Amendment Act of 2007 (D.C. Act 17-66,

annual report to the Commissioner and the Council j u | y g 2007 54 DCR 6819)

updating any information submitted to the Com- " * ' ' *

missioner with regard to the community develop- Legislative History of Laws

ment program." For Law 17-59, see notes following § 26-636.

; and, in subsec. (e)(1), deleted "or the Council"; Resolutions
and repealed subsecs. (f) to (i).

Section 5(b) of D.C. Law 17-31 provides that the Resolution 16-114, the "Bank of Georgetown

act shall expire after 225 days of its having taken Approval Resolution of 2005", was approved effec-

effect. tive April 5, 2005.

§ 26-706.01. Alternative entry by acquisition.

(a) Notwithstanding any other provisions of this subchapter, 90 days after April 11, 1986,
any nonregional bank holding company may make application to the Superintendent for
approval to acquire:

(1) Any District bank that was in existence on December 18, 1985, and continuously
operating for at least 2 years prior to that date; or

(2) Any District bank holding company all of the District bank subsidiaries of which were
in existence on December 18, 1985, and that had been in existence and continuously
operating for at least 2 years prior to that date. The Superintendent shall list applications
for acquisition among the pending applications in the Superintendent's periodic bulletin,
published in the District of Columbia Register, and mailed without charge to any person
upon request. Prior to deciding whether to grant approval of the application, the
Superintendent shall accept public comment on the application and shall hold a public
hearing on the application, according to procedures established by the rules issued by the
Superintendent. The Superintendent shall not approve the acquisitions unless it is found
that the application satisfies the requirements of § 26-704, including the $4,000 application
fee, and subsection (b) of this section.

(b) An applicant under this section shall be required to demonstrate to the Superintendent

that:

(1) The applicant will make loans and extend credit in a target economic development
project in the District for an amount equal to or greater than .0625% of the applicant's total
assets 3 years following the date of acquisition of a District bank holding company or
District bank. In no event shall the amount of loans and extension of credit be less than
$50,000,000 or required to be made more than $100,000,000, though an applicant may agree
to make loans and extend credit in target economic development projects in excess of
$100,000,000, and the loans shall not include temporary financing, general obligation bonds
issued by the District government, or the purchase of an interest in a pool of mortgage
loans, such as mortgage participation certificates issued or guaranteed by the Federal
Home Loan Mortgage Corporation, the Government National Mortgage Association, or the
Farmers Home Administration;

(2) The applicant will establish at least 2 bank offices in target banking development
areas, in addition to any acquired bank offices, within 3 years following the date of
acquisition of a District bank or District bank holding company;

(3) The applicant will cash checks issued by the District and the United States govern-
ments at bank offices within target banking development areas, even though the bearer of
the check does not maintain an account at the bank. According to normal and prudent
banking practices, the bank may verify that the individual who presents the check at the
bank office is legally entitled to payment;

(4) The applicant will sell food coupons pursuant to 7 U.S.C. § 2011 et seq.;

(5) The applicant will employ at least 200 District residents, or a lesser number
according to a sliding scale based upon total assets to be developed by the Superintendent,
but in no event less than 50, in positions located in the District that were not located in the
District prior to approval of the application, within 3 years following the date of acquisition
of a District bank holding company or District bank; and

144

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-706.01

(6) The applicant will promote international trade and finance within the District.

(c)(1) With its application, an applicant shall submit an irrevocable and confirmed letter of
credit for $10,000,000 from an acceptable bank, as determined by the Superintendent. The
letter of credit shall name the District of Columbia as the beneficiary and shall provide that
the District of Columbia Treasurer shall receive up to $10,000,000 upon presentation to the
issuer by the Superintendent of a decision and order which is reached pursuant to the
procedures in subsection (f) of this section and which is a final order because all administra-
tive and judicial appeals of the decision and order are exhausted or untimely. The letter of
credit shall be established as of the date when the applicant submits its application to the
Superintendent.

(2) In place of an irrevocable and confirmed letter of credit, the Superintendent may
authorize the use of any other financial instrument which would assure payment of fines
assessed pursuant to subsection (f) of this section.

(cl) The Superintendent may reduce or extend the time within which a bank holding
company shall satisfy any commitment made in connection with an application filed pursuant
to this section, if the Superintendent finds that the commitment was contingent upon certain
action to be taken by the District and the District does not take the action, or, upon good
cause shown, the economic or financial conditions of the bank holding company justifies the
action.

(e) Any District bank holding company or District bank may choose not to be acquired
pursuant to this section by having a resolution to that effect passed by its board of directors
and shareholders. The resolution shall be forwarded to the Superintendent within 60 days
after its adoption. No acquisition of a bank or bank holding company which has timely filed
such a resolution shall be allowed by the Superintendent unless notice is given to the
Superintendent, at the time an application is filed, that the resolution has been withdrawn or
reversed by vote of the board of directors and shareholders.

(f)(1) The Superintendent may, at any time, review the activities of a nonregional bank
holding company making an acquisition under this section and of its District bank subsidiaries
to determine whether the nonregional bank holding company is fulfilling the commitments set
forth in subsection (b) of this section. In all events, at the end of 3 years following the
acquisition of a District bank or a District bank holding company under this section, the
Superintendent shall review the activities of the nonregional bank holding company making
the acquisition, and of its District bank subsidiaries, and shall determine whether the
nonregional bank holding company has fulfilled, and is continuing to fulfill, the commitments
set forth in subsection (b) of this section. The Superintendent shall complete the review and
make the determination no later than 3 years and 3 months after the acquisition of a District
bank or bank holding company by the nonregional bank holding company. The Superinten-
dent may require a nonregional bank holding company making an acquisition under this
section, and its District bank subsidiaries, to supply the information and to submit the reports
the Superintendent considers necessary in order to make a determination under this
subsection.

(2) Upon the determination of the Superintendent that a bank holding company has
failed to comply with any commitment made in connection with an application filed
pursuant to this section, the Superintendent shall order the company to take steps to
comply with the commitment within a specified reasonable period of time. The Superinten-
dent may extend this specified reasonable period of time.

(3) If, 30 days after the date specified for compliance by an order issued pursuant to this
subsection, including any extension, the Superintendent believes that the bank holding
company has not complied with the order, the Superintendent shall hold a hearing pursuant
to § 2-509, to determine whether the bank holding company has failed to comply with the
order. The hearing shall be subject to judicial review by the District of Columbia Court of
Appeals pursuant to § 2-510.

(4) If, after the hearing and final order issued upon the completion of all appeals, the
Superintendent concludes that the bank holding company has not complied with the
Superintendent's order within the specified period of time, including any extension, the
bank holding company has not undertaken a good faith effort to comply with the

145

§ 26-706.01 BANKS AND OTHER FINANCIAL INSTITUTIONS

Superintendent's order, and the applicant has not substantially completed its commitment
pursuant to this section, the Superintendent shall either:

(A) Order the bank holding company to divest itself of control of all District banks and
bank holding companies within a reasonable period of time. If, the Superintendent
orders a bank holding company to divest itself of control of all District banks and bank
holding companies pursuant to this paragraph, the divestiture shall, in all events, be
completed within 1 year after the date on which the Superintendent's order becomes final
and not pending further judicial review; or

(B) Fine the bank holding company $10,000,000 and present the decision and order,
including a showing that all administrative and judicial appeals of that decision and order
are exhausted or untimely, to the issuer of the $10,000,000 letter of credit or other
financial assurance required in subsection (c) of this section, and shall call upon the issuer
to honor the letter of credit or other financial assurance for the fall amount of
$10,000,000.

(5) If, after the hearing and final order issued upon the completion of all appeals, the
Superintendent concludes that the bank holding company has not complied with the
Superintendent's order within the specified period of time, including any extension, the
bank holding company has not undertaken a good faith effort to comply with the
Superintendent's order, and the bank holding company has substantially completed its
commitment pursuant to this section, the Superintendent may fine the bank holding
company up to $10,000,000, and, if the Superintendent does fine the bank holding company,
the Superintendent shall present the decision and order, including a showing that all
administrative and judicial appeals of that decision and order are exhausted or untimely, to
the issuer of the $10,000,000 letter of credit or other financial assurance required in
subsection (c) of this section, and shall call upon the issuer to honor the letter of credit or
other financial assurance for payments equal to the amount of the fines assessed pursuant
to this paragraph.

(6) If, after the hearing and final order issued upon the completion of all appeals, the
Superintendent concludes that the bank holding company has not complied with the
Superintendent's order within the specified period of time, including any extension, the
bank holding company has undertaken a good faith effort to comply with the Superinten-
dent's order, and the bank holding company has not substantially completed its commit-
ment pursuant to this section, the Superintendent may fine the bank holding company up to
$10,000,000, and, if the Superintendent does fine the bank holding company, the Superin-
tendent shall present the decision and order, including a showing that all administrative
and judicial appeals of that decision and order are exhausted or untimely, to the issuer of
the $10,000,000 letter of credit or other financial assurance required in subsection (c) of this
section, and shall call upon the issuer to honor the letter of credit or other financial
assurance for payment equal to the amount of the fines assessed pursuant to this
paragraph.

(7) If, after the hearing and final order issued upon the completion of all appeals, the
Superintendent concludes that the bank holding company has not complied with the
Superintendent's order within the specified period of time, including any extension, the
bank holding company has undei^taken a good faith effort to comply with the Superinten-
dent's order and the bank holding company has substantially completed its commitment
pursuant to this section, the Superintendent may fine the bank holding company up to
$5,000,000, and, if the Superintendent does fine the bank holding company, the Superinten-
dent shall present the decision and order, including a showing that all administrative and
judicial appeals of that decision and order are exhausted or untimely to the issuer of the
$10,000,000 letter of credit or other financial assurance required in subsection (c) of this
section, and shall call upon the issuer to honor the letter of credit or other financial
assurance for payment equal to the amount of the fines assessed pursuant to this
paragraph, but the payment shall not be greater than $5,000,000.

(8) The Superintendent shall exercise the Superintendent's authority under paragraphs
(3), (4), (5), and (6) of this subsection within 4 years of the date of the acquisition of a
District bank holding company or District bank, plus any extensions and any period during
which a hearing and its appeals, if any, are pending pursuant to this subsection.

146

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-712

(9) The Superintendent shall submit a -written report of any actions that the Superinten-
dent takes pursuant to this subsection to the Council and to the Federal Reserve Board.

(Nov. 23, 1985, D.C. Law 6-63, § 7a, as added Apr. 11, 1986, D.C. Law 6-107, § 2(e), 33 DCR 1168; Dec.
11, 2007, D.C. Law 17-59, § 3(c), 54 DCR 10718.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 17-59, in subsec. (d), deleted "and the
Council approves, by resolution, the reduction or
extension" following "justifies the action".
Temporary Amendments of Section

Section 3(c) of D.C. Law 17-31, in subsec. (d),
deleted "and the Council approves, by resolution,
the reduction or extension".

Section 5(b) of D.C. Law 17-31 provides that the
act shall expire after 225 days of its having taken
effect.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 3(c) of Bank Charter Modernization Emer-
gency Amendment Act of 2007 (D.C. Act 17-66,
July 9, 2007, 54 DCR 6819).

Legislative History of Laws

For Law 17-59, see notes following § 26-636.

§ 26-711. Use of women-owned banks.

(a) Recipients of District of Columbia government contracts are encouraged to use women-
owned banks and federally or District chartered minority-owned banks certified by the Small
and Local Business Opportunity Commission in accordance with subchapter IX-A of Chapter
2 of Title 2.

(b) The Mayor shall, pursuant to subchapter I of Chapter 5 of Title 2, issue rules to
implement the provisions of this section within 90 days of March 16, 1989. All rules issued
pursuant to this subsection shall be transmitted to the Council for review.

(Nov. 23, 1985, D.C, Law 6-63, § 10b as added Mar. 16, 1989, D.C. Law 7-187, § 2(b), 35 DCR 8648;
October 4, 2000, D.C. Law 13-169, § 6, 47 DCR 5846; Oct. 20, 2005, D.C, Law 16-33, § 2381(a), 52 DCR
7503.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 16-33, in subsec. (a), substituted
"Small and Local Business Opportunity Commis-
sion in accordance with subchapter IX-A of Chap-
ter 2 of Title 2" for "District of Columbia Local
Business Opportunity Commission in accordance
with subchapter IX of Chapter 2 of Title 2".

Temporary Amendments of Section

Section 6 of D.C. Law 13-216, in subsec. (a),
substituted "District of Columbia Local Business
Opportunity Commission in accordance with the
Equal Opportunity for Local, Small, and Disad-
vantaged Business Enterprises Act of 1998" for
"Minority Business Opportunity Commission in ac-
cordance with the District of Columbia Minority
Contracting Act of 1976".

Section 11(b) of D.C. Law 13-216 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2381(a) of Fiscal Year 2006 Budget Support

Emergency Act of 2005 (D.C. Act 16-168, July 26,
2005, 52 DCR 7667).
Legislative History of Laws

Law 13-216, the "Equal Opportunity for Local,
Small, or Disadvantaged Business Enterprises
Temporary Amendment Act of 2000", was intro-
duced in Council and assigned Bill No. 13-789.
The Bill was adopted on first and second readings
on July 11, 2000, and October 3, 2000, respectively.
Signed by the Mayor on October 30, 2000, it was
assigned Act No. 13-468 and transmitted to both
Houses of Congress for its review. D.C. Law
13-216 became effective on April 3, 2001.

Law 16-33, the "Fiscal Year 2006 Budget Sup-
port Act of 2005", was introduced in Council and
assigned Bill No. 16-200 which was referred to the
Committee of the Whole. The Bill was adopted on
first and second readings on May 10, 2005, and
June 21, 2005, respectively. Signed by the Mayor
on July 26, 2005, it was assigned Act No. 16-166
and transmitted to both Houses of Congress for its
review. D.C. Law 16-33 became effective on Octo-
ber 20, 2005.

§ 26-712. Administrative procedure; cease and desist orders.

(a)(1) If, in the opinion of the Superintendent, a District banking corporation or a director,
officer, employee, agent, or other person who participates in the conduct of the affairs of the
banking corporation, engages in an unsafe or unsound practice in conducting the business of

147

§ 26-712 BANKS AND OTHER FINANCIAL INSTITUTIONS

the bank or violates or is about to violate a law, rule, regulation, written condition imposed by
the Superintendent in connection with the grant of any application or request, or any written
agreement entered into with the Superintendent, the Superintendent may institute an
administrative action against the bank or person by the issuance of a Notice of Charges.
(2) If, in the opinion of the Superintendent, a person or a director, officer, employee,
agent, or other person who participates in the conduct of the affairs of the person violates
or is about to violate a law, rule, regulation, written condition imposed by the Superinten-
dent in connection with the grant of any application or request, or any written agreement
entered into with the Superintendent, the Superintendent may institute an administrative
action against the person by the issuance of a Notice of Charges.

(b) The Notice of Charges shall set forth the basis for the administrative action and shall
set a time and place for a hearing to determine whether a cease and desist order shall issue
based on the Notice of Charges. The hearing shall be held within 60 days after the service of
the Notice of Charges unless another date is set by the hearing officer at the request of 1 of
the parties.

(c) In the event of a consent or default or if, upon the record at the hearing, the
Superintendent finds that any violation or practice alleged in the Notice of Charges is
established by a preponderance of the evidence, the Superintendent may issue an order to
cease and desist from the violation or practice. The order may require the bank or person or
director, officer, employee, agent, or other person who participates in the conduct of the
affairs of the bank or person to cease and desist from the violation or practice, and take
affirmative action to correct the violation or practice or any condition that results from the
violation or practice. The affirmative action may include indemnification, reimbursement,
restitution, or any other relief that the Superintendent deems appropriate.

(d) The cease and desist order shall become effective 30 days after service or, in the case of
consent, shall become effective immediately. The order shall remain effective and enforce-
able unless the order is stayed, modified, terminated, or set aside by the Superintendent or a
reviewing court.

(e) If, in the opinion of the Superintendent, a violation or practice or threatened violation or
practice of this subchapter or § 26-103 is likely to cause insolvency, substantial dissipation of
the assets or earnings of the bank or person, or serious prejudice to the interests of the
depositors or customers of the bank or person, the Superintendent, through the Office of the
Corporation Counsel, may:

(1) Petition the court to issue a restraining order to prevent the continuance of the
violation or practice or threatened violation or practice, pending completion of the Superin-
tendent's administrative proceeding;

(2) Petition the court to appoint a receiver with any power or duty that the court may
direct to preserve the assets of the corporation or person in accordance with part B of
subchapter XII of Chapter 3 of Title 29. Notwithstanding part B of subchapter XII of
Chapter 3 of Title 29, a court may appoint a receiver to preserve the assets of a person and
shall not be required to liquidate the assets of a corporation or person unless warranted;

(3) Petition the court to freeze or seize the assets of the bank or person consistent with
applicable law; or

(4) Petition the court for an order for the involuntary dissolution of a corporation
pursuant to part B of subchapter XII of Chapter 3 of Title 29 if the corporation exceeded or
abused the authority conferred upon the corporation by Chapter 1, 2, or 3 of Title 29.

(Nov. 23, 1985, D.C. Law 6-63, § 10c, as added Aug. 17, 1991, D.C. Law 9-42, § 2(d), 38 DCR 4981; Julv
2, 2011, D.C. Law 18-378, § 3(g), 58 DCR 1720.)

Historical and Statutory Notes

Effect of Amendments ferred upon the corporation by Chapter 1, 2, or 3

D.C. Law 18-378, in subsec. (e)(2), substituted of Title 29" for "§ 29-101.189 if the corporation

"part B of subchapter XII of Chapter 3 of Title exceeded or abused the authority conferred upon

29 " for "§§ 29-391 and 29-392 ('Business Corpo- the corporation by Chapter 1 of Title 29".

ration Act') and "the provisions of §§ 29-391 and T . _ .

29-392" ; and, in subsec. (e)(4), substituted "part Legislative History of Laws

B of subchapter XII of Chapter 3 of Title 29 if the For history of Law 18-378, see notes under

corporation exceeded or abused the authority con- § 26-201.

148

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-802

Chapter 8
Joint Accounts; Adverse Claimants; Trust Accounts.

Section Section

26-801. Deposits or shares of stock in names of 2 26-802. Property in boxes, vaults or held for
or more persons; payments or deliver- safekeeping for 2 or more persons;

ies; liability of bank." ri g nt of access or delivery; liability of

bank.

§ 26-801. Deposits or shares of stock in names of 2 or more persons; payments
or deliveries; liability of bank.

Except as provided in §§ 19-602.21 to 19-602.26, when a deposit shall have been made in,
or shall after May 15, 1928, be made in, or any collection item shall have been placed or shall
after May 15, 1928, be placed with any bank, trust company, savings bank, building
association, or other banking institution, including national banks, transacting business in the
District of Columbia, or when any shares of stock shall have been issued or shall after May
15, 1928, be issued by any building association, transacting business in the District of
Columbia, in the names of 2 or more persons, including spouses or domestic partners, payable
to either, or payable to either or the survivor or survivors, such deposit, or in any part
thereof, or any interest or dividend thereon, and such collection item or its proceeds, or any
interest or dividend thereon, or such shares of stock issued by a building association or any
interest or dividend thereon, may be paid or delivered to either of said persons whether the
other or others be living or not; and the receipt or acquittance of the person to whom such
payment or delivery is made shall be a valid, sufficient, and complete release and discharge of
the bank, trust company, savings bank, building association, or other banking institution,
including national banks, for any payment or delivery so made. For the purposes of this
section, the term "domestic partner" shall have the same meaning as provided in § 32-701(3).

(May 15, 1928, 45 Stat. 533, ch. 568, § 1; Apr. 27, 2001, D.C. Law 13-292, § 303, 48 DCR 2087; Sept. 12,
2008, D.C. Law 17-231, § 25(a), 55 DCR 6758.)

Historical and Statutory Notes

Effect of Amendments tively. Signed by the Mayor on January 26, 2001,

D.C. Law 13-292 substituted "Except as provid- it was assigned Act No. 13-599 and transmitted to

ed in §§19-602.21 to 19-602.26, when" for both Houses of Congress for its review. D.C. Law

"When". 13-292 became effective on April 27, 2001.

D.C. Law 17-231 substituted "spouses or domes- Law 17 _ 231 the « mnibus Domestic Partner-

tic partners for husband and wile ; and added , . -^ v , * -, , A , f OAAO „ . ,

"For the purposes of this section, the term 'domes- f* ^ ual ^ Amendment Act of 2008 was in tro-

tic partner' shall have the same meaning as provid- duced m Counci1 ancl as ^ed Bl11 No - i 7 " 1 ^,

ed in § 32-701(3) " which was referred to the Committee on Public

Legislative History of Laws , Safet y *f the J f^- The B A in ™? adopted on

Law 13-292, the "Omnibus Trusts and Estates ^ st f d or 5 o C0nd readm f ° Q n Aw 'V\l f*

Amendment Act of 2000", was introduced in Coun- M ^ 6 ' 2008 ' respectively. Signed by the Mayor

cil and assigned Bill No. 13-298, which was re- on June 6 > 2008 > lt W£ls assigned Act No. 17^03

ferred to the Committee on the Judiciary. The and transmitted to both Houses of Congress for its

Bill was adopted on first and second readings on review. D.C. Law 17-231 became effective on

December 5, 2000, and December 19, 2000, respec- September 12, 2008.

§ 26-802. Property in boxes, vaults or held for safekeeping for 2 or more
persons; right of access or delivery; liability of bank.

When a safety deposit box or vault shall have been hired from any bank, trust company,
savings bank, building association, or other banking institution, including national banks, or
any other corporation, transacting business in the District of Columbia, in the names of 2 or
more persons, including spouses or domestic partners, with the right of access being given to
either, or with access to either or the survivor or survivors of said persons, or property is held
for safekeeping by any such bank, trust company, savings bank, building association, or other
corporation or banking institution, including national banks, for 2 or more persons, including

149

§ 26-802

BANKS AND OTHER FINANCIAL INSTITUTIONS

spouses or domestic partners, with the right of delivery being given to either, or with the
right of delivery to either or the survivor or survivors of said persons, any one or more of
such persons, whether the other or others be living or not, shall have the right of access to
such safety deposit box or vault and to remove the contents thereof, or any part of such
contents, or to have delivered to him or them, the property so held for safekeeping, or any
part thereof, and in case of such removal or delivery the said bank, trust company, savings
bank, building association, or other corporation or banking institution, including national
banks, shall be exempt from any liability for permitting such access or removal or for the
delivery to such person or persons. For the purposes of this section, the term "domestic
partner" shall have the same meaning as provided in § 32-701(3).
(May 15, 1928, 45 Stat, 534, ch. 568, § 2; Sept. 12, 2008, D.C. Law 17-231, § 25(b), 55 DCR 6758.)

Historical and Statutory Notes

Effect of Amendments

D.C, Law 17-231 substituted "spouses or domes-
tic partners" for "husband and wife"; and added
"For the purposes of this section, the term 'domes-

tic partner' shall have the same meaning as provid-
ed in § 32-701(3)."
Legislative History of Laws

For Law 17-231, see notes following § 26-801.

Chapter 8A
Merchant Banks.

Subchapter I. General Provisions.

Section

26-831.01. Short title.
26-831.02. Definitions.

Subchapter II. Application and Certification
as a Merchant Bank.

26-83.1.03. Application for merchant bank char-
ter; review and approval or disap-
proval of application.

26-831.04. Issuance of certificate of authority.

26-831.05. Revocation or subsequent limitation of
certificate of authority.

26-831.06. Voluntary termination of certification
of authority.

Subchapter III. Powers and Authority
of a Merchant Bank.

26-831.07. Powers of merchant banks; limits on
powei's.

Subchapter IV. Structure and Organization

of a Merchant Bank; Capital

Requirements.

26-831.08. Capital requirements of a merchant
bank.

26-831.09. Structure and organization of mer-
chant banks.

Section

26-831.10.

Policies of merchant bank's business
activities.

Subchapter V. Commissioner Possession,

Receivership, Conservatorship, and

Liquidation of Merchant Banks.

26-831.11. Liquidation of merchant banks in gen-
eral.

26-831.12. Commissioner taking possession of
merchant banks.

26-831.13. Resumption of business by a merchant
bank.

26-831.14. Appointment of a receiver for a mer-
chant bank.

26-831.15. Receiver duties and powers.

26-831.16. Lien on property or assets; voidable
transfer.

26-831.17. Maintenance and disposal of records
by receiver.

26-831.18. Conservator; appointment; bond and
security; qualifications; expenses.

26-831.19. Conservator; rights, powers, and privi-
leges.

26-831.20. Authority of conservator to borrow
money; purpose.

26-831.21. Termination of conservatorship.

Subchapter VI. Miscellaneous Provisions.

26-831.22. Rules.

Subchapter I. General Provisions.
§ 26-831.01. Short title.

This chapter may be cited as the "Merchant Bank Act of 2000".
(June 9, 2001, D.C. Law 13-308, § 301, 48 DCR 3244.)

150

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-831.03

Historical and Statutory Notes

Legislative History of Laws November 8, 2000, and December 5, 2000, respec-

Law 13-308, the "21st Century Financial Mod- tively. Signed by the Mayor on January 26, 2001,

ernization Act of 2000", was introduced in Council it was assigned Act No. 13-597 and transmitted to

and assigned Bill No. 13-867, which was referred both Houses of Congress for its review. D.C. Law

to the Committee on Economic Development. The 13 _ 308 became effective on June 9 2 001.
Bill was adopted on first and second readings on

§ 26-831.02. Definitions.

For the purposes of this chapter, the term:

(1) "Affiliate" shall have the same meaning as set forth in § 26-551.02(1).

(2) "Appropriate financial institutions agency" means the federal or state agency with
statutory authority over the financial institution activities of a financial institution.

(3) "Capital" shall have the same meaning as set forth in § 26-551.02(6).

(4) "Commissioner" shall have the same meaning as set forth in § 26-551.02(7).

(5) "Department" shall have the same meaning as set forth in § 26-551.02(9).

(6) "Deposit" means a demand, time, or savings deposit, savings share account, with-
drawable or repurchasable share, investment certificate, or other savings account or
savings deposit account made by an individual, corporation, partnership, state or federal
government unit, or any other government organization, without regard to the location of
the depositor.

(7) "District" means the District of Columbia.

(8) "District of Columbia Banking Code" shall have the same meaning as set forth in
§ 26-551.02(14).

(9) "Financial institution" shall have the same meaning as set forth in § 26-551.02(18).

(10) "Merchant bank" means a financial institution that is chartered or organized under
the District of Columbia Banking Code as a merchant bank and is under the authority and
supervision of the Commissioner.

(11) "Subsidiary" shall have the same meaning as set forth in § 26-551.02(24).

(12) "Superior Court" means Superior Court of the District of Columbia.

(13) "Universal bank" shall have the same meaning as set forth in § 26-1401.02(28).
(June 9, 2001, D.C. Law 13-308, § 302, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(i), 51 DCR
2817.)

Historical and Statutory Notes
Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 15-166 rewrote pars. (4) and (5) which 15-381, February 27, 2004, 51 DCR 2653).
had read as follows:

(4) "Commissioner" means the Commissioner of
the Department of Banking and Financial Institu-

Legislative History of Laws

For Law 13-308, see notes following

tions. § 26-833.01.

"(5) 'Department' means the Department of For Law 15-166, see notes following

Banking and Financial Institutions." § 26-131.02.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2(i) of Consolidation of Financial Services

Subchapter II. Application and Certification as a Merchant Bank.

§ 26-831.03. Application for merchant bank charter; review and approval or
disapproval of application.

(a) A person described in § 26-833. 09(a) may apply for a merchant bank charter by filing a
written application with the Commissioner. The application shall include such information as
the Commissioner may require by regulation and shall be on such forms and in accordance
with such procedures as the Commissioner may prescribe by regulation.

(b) An application submitted under subsection (a) of this section shall be approved or
disapproved in writing by the Commissioner within 60 days after a complete application is

151

§ 26-831.03 BANKS AND OTHER FINANCIAL INSTITUTIONS

submitted to the Commissioner. The Commissioner and the applicant may agree to extend the
review period for an additional 60 days.

(1) The applicant is authorized under its articles of incorporation or other organizational
documents to act as a financial institution;

(2) The applicant is in good standing with the Department and there is no investigatory
or enforcement action pending against the applicant by the Department;

(3) The applicant is in good standing with appropriate financial institutions agencies and
there is no investigatory or enforcement action pending against the applicant by an
appropriate financial institutions agency;

(4) The applicant is well capitalized and will maintain a capital level as required by this
chapter and as the Commissioner may require as appropriate for the purposes of safety
and soundness;

(5) The applicant does not exhibit a combination of financial, managerial, operational, and
compliance weaknesses that are moderately severe or unsatisfactory, as determined by the
Commissioner, based upon the Commissioner's assessment of the applicant's capital ade-
quacy of liquidity, and sensitivity to market risk;

(6) The most recent examination that the applicant has received from its federal
appropriate financial institutions agency, if any, indicates that the applicant is in compliance
with applicable federal law and regulation;

(7) The applicant agrees to comply with applicable regulations and rules promulgated by
the Commissioner;

(8) The applicant agrees to comply with any lawful order of the Commissioner and with
any conditions imposed by the Commissioner in connection with the approval of an
application, including additional requirements imposed on the applicant that the Commis-
sioner determines are necessary for the protection of the shareholders or creditors of the
applicant or of the general public;

(9) The applicant agrees to comply with any written agreement entered into with the
Commissioner in connection with the approval of an application;

(10) The Commissioner determines that it is reasonable to believe that the applicant will
act in a safe and sound manner and maintain a safe and sound condition; and

(11) The Commissioner determines that issuing a merchant bank charter to the applicant
will serve the public interest.

(June 9, 2001, D.C. Law 13-308, § 303, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.04. Issuance of certificate of authority.

If the Commissioner approves the application of an applicant to be a merchant bank, the
Commissioner shall issue to the applicant a charter stating that the applicant is authorized to
conduct business as a merchant bank under this chapter.
(June 9, 2001, D.C. Law 13-308, § 304, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.05. Revocation or subsequent limitation of certificate of authority.

If a merchant bank fails to maintain the standards and requirements of this chapter, the
Commissioner shall, by order, revoke or limit the exercise of the powers of the merchant
bank's authority.

(June 9, 2001, D.C. Law ia-308, § 305, 48 DCR 3244.)

152

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-831.07

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.06. Voluntary termination of certification of authority.

An applicant that is chartered as a merchant bank under this chapter may elect to
terminate its charter by giving 60 days prior written notice of the termination to the
Commissioner. A termination under this section shall be effective only with the written
approval of the Commissioner. An applicant shall, as a condition to a termination under this
section, terminate its exercise of all powers granted under this chapter before the termination
of the certification. The Commissioner's written approval of a applicant's termination under
this section shall be void if the applicant fails to satisfy the condition to termination under this
section.
(June 9, 2001, D.C. Law 13-308, § 306, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

Subchapter III. Powers and Authority of a Merchant Bank.

§ 26-831.07. Powers of merchant banks; limits on powers.

(a) Except as provided in this chapter, a merchant bank shall have all the powers and
authority of a District-chartered bank or District-chartered savings and loan, including
powers and authority with respect to investments, loans, fiduciary and trust functions, and
transactions; provided, that a merchant bank shall obtain certification as a universal bank
before exercising those powers of a universal bank.

(b) A merchant bank shall not solicit, receive, or accept money, or its equivalent, on
deposit, or engage in deposit-like activity, as a regular business activity.

(d) A merchant bank may deposit cash, whether constituting principal or income, in any
financial institution inside or outside the District of Columbia.

(e) A merchant bank shall notify the Commissioner at least 30 days before the merchant
bank establishes an office or branch office where the merchant bank intends to transact the
business of the merchant bank.

(f) A merchant bank may apply to the Commissioner for certification, chartering, or
organization as any other type of financial institution authorized under the District of
Columbia Banking Code.

(June 9, 2001, D.C. Law 13-308, § 307, 48 DCR 3244; Oct. 19, 2002, D.C. Law 14-213, § 18(d), 49 DCR
8140.)

Historical and Statutory Notes

Effect of Amendments District-chartered savings and loan is not author-

D.C. Law 14-213, in subsec. (a), substituted ized to exercise".

"provided, that a merchant bank shall obtain certi- Legislative History of Laws

fication as a universal bank before exercising those ^ T 10 ono 4- * n

e ■ 1 , , „ n u .j j ,, , ror Law 13-308, see notes following

powers ot a universal bank tor provided, that a „ ~„ „ „ ni ■ ■

universal bank shall obtain certification as a uni- s " ~ ° " *

versal bank before exercising those powers of a For Law 14-213, see notes following

universal bank that a District-chartered bank or § 26-131.02.

153

§ 26-831.08 BANKS AND OTHER FINANCIAL INSTITUTIONS

Subchapter IV. Structure and Organization of

a Merchant Bank; Capital Requirements.

§ 26-831.08. Capital requirements of a merchant bank.

(a) The minimum amount of initial capital for a merchant bank shall be $20 million, of
which at least $10 million shall be common stock or an equity interest. The balance may be
composed of qualifying subordinated or similar debt as determined under regulations
promulgated by the Commissioner. The Commissioner may modify the required minimum
amount of initial capital if an applicant files with the Commissioner a written request and
application, which application shall include a capital plan and any other documentation
required by the Commissioner by regulation or order.

(b) A merchant bank shall maintain minimum capital in at least the same amount as the
minimum initial capital required under subsection (a) of this section or in such other amount
as the Commissioner may establish by rule or by order, after the filing of a request and
application by a merchant bank; provided, the Commissioner shall not establish a minimum
capital requirement for a merchant bank that is less than 150% of the tier 1 risk-based capital
or 150% of the total risk-based capital established by the Board of Governors of the Federal
Reserve System for a well-capitalized bank.

(June 9, 2001, D.C. Law 13-308, § 308, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.09. Structure and organization of merchant banks.

(a) A merchant bank may be organized as a corporation, limited liability company, limited
partnership, or limited liability partnership.

(b) The articles of incorporation or other organizational documents of a merchant bank
shall contain the following statement: "This [corporation/limited liability company/limited
partnership/limited liability partnership] is subject to the requirements of the District of.
Columbia Banking Code and does not have the power to solicit, receive or accept money or its
equivalent on deposit." The appropriate business form listed in the bracketed text in the
statement shall be included in the statement. The statement shall not otherwise be amended.

(c) A merchant bank may use as a part of its name the word "bank," "banker", "banking",
or any abbreviations of those words.

(June 9, 2001, D.C. Law 13-308, § 309, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.10. Policies of merchant bank's business activities.

(a) The board of directors of a merchant bank, if the merchant bank is a corporation, or its
equivalent governing body, if the merchant bank is another type of business entity, shall
establish a written policy under which the merchant bank's business activities shall be
conducted. The written policy shall include the merchant bank's business plan, operating
procedures, investment policies, and lending policies. The written policy shall also address
conflicts of interest and shall preclude a merchant bank from making an investment in a small
business if the effect is to create the potential of a conflict of interest with a person having an
ownership interest in the merchant bank.

(b) The written policy under subsection (a) of this section for business activities shall be
reviewed and approved or disapproved by the Commissioner. If the Commissioner finds that

154

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-831.12

the policy does not adequately regulate the business activities of the merchant bank, the
Commissioner may require the board of directors, or equivalent governing body, to take
corrective action.
(June 9, 2001, D.C. Law 13-308, § 310, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

Subchapter V. Commissioner Possession, Receivership, Conservatorship,

and Liquidation of Merchant Banks.

§ 26-831.11. Liquidation of merchant banks in general.

A merchant bank shall not be liquidated except as provided by this chapter or in
accordance with the order of a court of competent jurisdiction.
(June 9, 2001, D.C. Law 13-308, § 311, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.12. Commissioner taking possession of merchant banks.

(a) Subject to § 26-1401.15. as it relates to the functional regulatory authority of the
Commissioner for the liquidation or rehabilitation of an insurance subsidiary or holding
company affiliate, the Commissioner may take possession of the business and property of a
merchant bank if the Commissioner has determined that one or more of the events described
in subsection (b) of this section has occurred.

(b) The Commissioner may take possession of the properties or business of a merchant
bank under subsection (a) of this section if the merchant bank:

(1) Has violated a law, rule, regulation, a condition imposed by the Commissioner in
connection with the approval of an application, an order or authorized request by the
Commissioner, or a term or condition of a written agreement entered into with the
Commissioner, and such violation affects the safe and sound condition and operation of the
bank or the severity of the violation calls into question the competency of management or
the quality of the operation of the bank;

(2) Is conducting its business in an unauthorized or unsafe or unsound manner;

(3) Is in an unsafe and unsound condition to transact its business;

(4) Has an impairment of its capital;

(5) Has suspended payment of its obligations;

(6) Has neglected or refused to comply with the terms of a duly issued order of the
Commissioner;

(7) Has refused, upon proper demand, to submit its records and affairs for inspection to
an examiner of the Department;

(8) Has refused to be examined upon oath regarding its affairs; or

(9) Has neglected, refused or failed to take or continue proceedings for voluntary
liquidation in accordance with any of the provisions of this chapter.

(c) If the Commissioner takes possession of the property or business of a merchant bank
under this section, the Commissioner shall inform the merchant bank of the merchant bank's
right to seek review of the Commissioner's action under subsection (e) of this section.

(d) The Commissioner may maintain possession of the property or business of a merchant
bank until:

(1) The affairs of the merchant bank are finally liquidated;

155

§ 26-831.12 BANKS AND OTHER FINANCIAL INSTITUTIONS

(2) The merchant bank voluntarily winds up its affairs; or

(3) The Commissioner authorizes the merchant bank to resume business under
§ 26-833.13.

(e) Within 10 days after the Commissioner takes possession of the property or business of
a merchant bank under this section, the merchant bank may apply to the Superior Court for
an order requiring the Commissioner to show cause why the Commissioner should not be
enjoined from continuing his or her possession of the property or business. The Superior
Court may, upon good cause shown, direct the Commissioner to surrender possession or some
or all of the business or property of the merchant bank or direct the Commissioner to take, or
refrain from taking, any action.

(f) In addition to the authority granted under this section, the Commissioner may request
the appointment of a receiver or conservator for the merchant bank under this chapter.

(June 9, 2001, D.C. Law 13-308, § 312, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(j), 51 DCR

2817.)

Historical and Statutory Notes

Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 15-166, in subsec. (a), deleted "of the 15-381, February 27, 2004, 51 DCR 2653).

Department of Insurance and Securities Regula- Legislative History of Laws

tion" following "authority of the Commissioner". p or Law 13-308, see notes following

Emergency Act Amendments § 26-833.01.

For temporary (90 day) amendment of section, For Law 15-166, see notes following

see § 2(j) of Consolidation of Financial Sendees § 26-131.02.

§ 26-831.13. Resumption of business by a merchant bank.

A merchant bank of which the Commissioner takes possession or which is operating under
restrictions imposed by the Commissioner may be permitted by the Commissioner to resume
business in accordance with the provisions' of this chapter and subject to such conditions as
may be imposed by the Commissioner.
(June 9, 2001, D.C. Law 13-308, § 313, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.14.' Appointment of a receiver for a merchant bank.

(a) The Commissioner may petition the Superior Court to appoint a receiver for a
merchant bank if there is a reasonable basis to believe that the merchant bank:

(2) Has violated a condition imposed by the Commissioner in connection with the
approval of an application, an order or authorized request of the Commissioner, or a
written agreement entered into with the Commissioner;

(3) Is conducting its business in an unauthorized, unsafe, or unsound manner;

(4) Is in an unsafe and unsound condition;

(5) Has an impairment of its capital;

(6) Has suspended payment of its obligations;

(7) Has refused, upon proper demand, to submit its records and affairs for inspection to
an examiner of the Department;

(8) Has refused to be examined upon oath regarding its affairs; or

156

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-831.15

(9) Has neglected, refused, or failed to take or continue proceedings for voluntary
liquidation in accordance with any of the provisions of this chapter.

(b) The Superior Court may act upon a petition by the Commissioner for the appointment
of a receiver immediately and without notice to any person. The Superior Court may appoint
a receiver if the Superior Court determines that a condition set forth in subsection (a) of this
section exists and that the bank is operating, or may operate, in an unsafe or unsound
manner. The Superior Court may also issue an injunction to require a universal bank to
correct any condition set forth in subsection (a) of this section, whether or not the bank is
operating, or may operate, in an unsafe or unsound manner. If the Superior Court appoints a
receiver and, after the appointment of the receiver, it appears to the court that reasons for
receivership do not, or no longer, exist, the Superior Court shall dissolve the receivership and
terminate any pending proceedings.

(c) Unless otherwise provided by law, a receiver, other than a receiver who is an employee
of the Department and acting in his or her official capacity, shall post a bond in an amount to
be determined by the Superior Court.

(d) The receiver shall, on a regular basis, report to the Commissioner regarding all matters
involving the receivership.

(June 9, 2001, D.C. Law 13-308, § 314, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.15. Receiver duties and powers.

(a) Subject to Superior Court approval, a receiver shall:

(1) Take possession of the books, records, and assets of the merchant bank and collect all
debts, dues, and claims belonging to the merchant bank;

(2) Sue, defend, compromise, arbitrate, or otherwise settle all claims involving the
merchant bank;

(3) Sell all real and personal property;

(4) Exercise all fiduciary functions of the merchant bank;

(5) Pay all administrative expenses of the receivership, which expenses shall be a first
charge upon the assets of the merchant bank and shall be fully paid before a final
distribution or payment of dividends to creditors or shareholders;

(6) Pay, ratably, all debts of the merchant bank; provided, that debts not exceeding $500
may be paid in full but the holders of such debt shall not be entitled to interest on the debt;

(7) Repay, ratably, any amount paid in by a shareholder by reason of an assessment
made upon the stock of the merchant bank by the Department in accordance with this
chapter;

(8) Pay, ratably, to the shareholders of the merchant bank, in proportion to the number
of shares held and owned by each, the balance of the net assets of the merchant bank after
payment or provision for payments as provided in this section;

(9) Have all the powers of the directors, officers, and shareholders of the merchant bank
as necessary to support an action taken on behalf of the merchant bank; and

(10) Hold title to all the bank's property, contracts, and rights of action

(b) Subject to Superior Court approval, a receiver may:

(1) Borrow money as necessary or expedient in aiding the liquidation of the merchant
bank and secure the borrowed money by the pledge, hypothecation, or mortgage of the
assets of the bank;

(2) Employ agents, legal counsel, accountants, appraisers, consultants, and other person-
nel, including, with the prior written approval of the Commissioner, personnel of the
Department, that the receiver considers necessary or expedient to assist in the perform-
ance of the receiver's duties; provided, that the expense of employing Department

157

§ 26-831.15 BANKS AND OTHER FINANCIAL INSTITUTIONS

personnel shall be an administrative expense of the liquidation that shall be payable to the

Department; or

(3) Exercise any other power and duty authorized by the Superior Court.
(June 9, 2001, D.C. Law 13-308, § 315, 48 DCR 3244; Oct 19, 2002, D.C. Law 14-213, § 18(e), 49 DCR
8140.)

Historical and Statutory Notes

Effect of Amendments For Law 14-213, see notes following

D.C. Law 14-213, in subsec. (a)(7), validated a § 26-131.02.
previously made technical correction.
Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.16. Lien on property or assets; voidable transfer.

(a). Except as provided in subsection (c) of this section, the transfer of, or a lien on, the
property or assets of the merchant bank shall be voidable by the receiver if the transfer or
lien was:

(1) Made or created within one year before the date the Commissioner takes possession
of the merchant bank or the date the merchant bank is ordered into receivership if the
receiving transferee or lien holder was at the time an affiliate, officer, director, employee,
or principal shareholder of the merchant bank or an affiliate of the merchant bank;

(2) Made or created within 90 days before the date the Commissioner takes possession of
the merchant bank or the date the merchant bank is ordered into receivership, with the
intent of giving to a creditor or depositor, or enabling a creditor or depositor to obtain, a
greater percentage of the creditor's or depositor's debt than is given or obtained by another
creditor or depositor of the same class;

(3) Accepted after the date the Commissioner takes possession of the merchant bank or
the date the merchant bank is ordered into receivership by a creditor or depositor having
reasonable cause to believe that a preference, as described in subsection (b) of this section,
will occur; or

(4) Voidable by the merchant bank and the merchant bank may recover the property
transferred, or its value, from the person to whom it was transferred or from a person who
has received it, unless the transferee or recipient was a bona fide holder for value before
the date the Commissioner takes possession of the merchant bank or the date the merchant
bank is ordered into receivership or conservatorship.

(b) A preference in a transfer or grant of an interest in the property or assets of a
merchant bank shall be deemed to occur when:

(1) There is an intent to hinder, delay, or defraud an entity to which, on or after the date
that the transfer or grant of interest was made, the merchant bank was or became
indebted; or

(2) Less than a reasonably equivalent value is obtained by the merchant bank in
exchange for the transfer or grant of interest if the merchant bank w r as insolvent when the
transfer or grant of interest was made or if the merchant bank became insolvent as a result
of the transfer or grant of interest,

(c) Notwithstanding any other provision of this chapter, the Commissioner or the receiver
shall not void an otherwise voidable transfer under this section if:

(1) The transfer or lien does not exceed $1,000 in value;

(2) The transfer or lien was received in good faith by a person who is not a described in
subsection (a)(1) of this section and who gave value in exchange for the transfer or lien; or

(3) The transfer or lien was intended by the merchant bank and the transferee or lien
holder to be, and in fact substantially was, a contemporaneous exchange for new value
given to the merchant bank.

(d) A person acting on behalf of the merchant bank who knowingly participated in making
or implementing a voidable transfer or lien, and each person receiving property or assets, or
the benefit of property or assets, of the merchant bank as a result of a voidable transfer or

158

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-831.19

lien, shall be personally liable for the property, assets, or benefit received and shall account to
the receiver for the benefit of the merchant bank.
(June 9, 2001, D.C. Law 13-308, § 316, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.17. Maintenance and disposal of records by receiver.

(a) With the approval of the Superior Court, a receiver may dispose of records of the
merchant bank in receivership that are obsolete and unnecessary to the continued administra-
tion of the receivership.

(b) The receiver may retain the records of the merchant bank and the receivership for a
period of time that the receiver considers appropriate or for a period of time as ordered by
the Superior Court.

(c) The receiver may devise a method for the effective, efficient, and economical mainte-
nance of the records of the merchant bank and of the receiver's office, including maintaining
the records on any medium approved by the Superior Court.

(d) The receiver may use assets of a merchant bank to:

(1) Procure services to maintain the records of a liquidated merchant bank; or

(2) Pay fees, as established by the Commissioner, to the Commissioner necessary for the
Commissioner to procure services to maintain the records of a liquidated merchant bank.

(June 9, 2001, D.C. Law 13-308, § 317, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.18. Conservator; appointment; bond and security; qualifications; ex-
penses.

(a) If any of the grounds under § 26-833.12 authorizing the request for the appointment of
a receiver exist or if the Commissioner determines that it is necessary to conserve the assets
of a merchant bank for the benefit of the depositors, investors, or other creditors of the bank
or for the benefit of the general public, the Commissioner may petition the Superior Court to
appoint a conservator for a merchant bank.

(b) The Department shall be reimbursed out of the assets of the conservatorship, for all
sums expended by the Department in connection with the conservatorship.

(c) All expenses of a conservatorship shall be paid out of the assets of the merchant bank
upon the approval of the Commissioner, shall be a first charge upon the assets of the
merchant bank, and shall be paid in full before a final distribution or payment of dividends to
creditors or shareholders of the merchant bank.

(June 9, 2001, D.C. Law 13-308, § 318, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.19. Conservator; rights, powers, and privileges.

(a) Under the supervision of the Commissioner, the conservator shall take possession of the
books, records, and assets of the bank and shall take any action necessary to conserve the

159

§ 26-831.19. BANKS AND OTHER FINANCIAL INSTITUTIONS

assets of the merchant bank pending further disposition of the business of the merchant bank
as provided by law.

(b) Subject to Superior Court approval and under the supervision of the Commissioner, a
conservator shall:

(1) Take possession of the books, records, and assets of the merchant bank and collect all
debts, dues, and claims belonging to the merchant bank;

(2) Sue, defend, compromise, arbitrate, or otherwise settle all claims involving the
merchant bank;

(3) Sell real and personal property if necessary to conserve the assets of the merchant
bank;

(4) Exercise all fiduciary functions of the merchant bank;

(5) Pay all administrative expenses of the conservatorship, which expenses shall be a
first charge upon the assets of the merchant bank and shall be fully paid before a final
distribution or payment of dividends to creditors or shareholders;

(6) Pay the debts of the merchant bank if the conservator determines that payment of
the debts is in the best interests of the merchant bank;

(7) Have all the powers of the directors, officers, and shareholders of the merchant bank
as necessary to support an action taken on behalf of the merchant bank; and

(8) Hold title to all the bank's property, contracts, and rights of action.

(1) Employ agents, legal counsel, accountants, appraisers, consultants, and other person-
nel, including, with the prior written approval of the Commissioner, personnel of the
Department, that the conservator considers necessary or expedient to assist in the
performance of the conservator's duties; provided, that the expense of employing Depart-
ment personnel shall be an administrative expense of the liquidation that shall be payable
to the Department; or

(2) Exercise any other power and duty authorized by the Superior Court.

(d) Unless otherwise provided by law, a conservator, other than a conservator who is an
employee of the Department and acting in his or her official capacity, may be required to post
a bond in an amount to be determined by the Superior Court.

(e) The conservator shall, on a regular basis, report to the Commissioner regarding all
matters involving the conservatorship.

(June 9, 2001, D.C. Law 13-308, § 319, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

§ 26-831.20. Authority of conservator to borrow money; purpose.

(a) With the prior approval of the Commissioner, the conservator of a merchant bank may
borrow money to aid in the operation, reorganization, or liquidation of the bank, including the
payment of liquidating dividends.

(b) With the prior approval of the Commissioner, the conservator may secure money
borrowed under subsection (a) of this section by the pledge, hypothecation, or mortgage of
the assets of the merchant bank.

(June 9, 2001, D.C. Law 13-308, § 320, 48 DCR 3244.)

Historical and Statutory Notes

Legislative Histoiy of Laws

For Law 13-308, see notes following
§ 26-833.01.

160

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-901

§ 26-83 1.2 L Termination of conservatorship.

(a) If the Commissioner determines that termination of the conservatorship and resump-
tion of the transaction of the merchant bank's business by the merchant bank can be achieved
and maintained in a safe and sound manner and is otherwise in the public interest, the
Commissioner may petition the Superior Court to terminate a conservatorship and permit the
merchant bank to resume the transaction of its business, subject to terms, conditions,
restrictions, and limitations as the Commissioner determines are appropriate.

(b) If the Superior Court determines that reasons for the conservatorship no longer exist,
the Superior Court may dissolve the conservatorship and terminate any pending proceedings.

(c) If the Commissioner determines that it would be in the public interest, the Commission-
er may petition the Superior Court for termination of a consei-vatorship and appointment of a
receiver for the merchant bank under § 26-833.12.

(June 9, 2001, D.C. Law 13-308, § 321, 48 DCR 3244.)

Legislative History of Laws

For Law 13-308, see
§ 26-833.01.

Historical and Statutory Notes

notes following

Subchapter VI. Miscellaneous Provisions.

§ 26-831.22. Rules.

The Commissioner may prescribe rules governing the activities of merchant banks and
implementing this chapter pursuant to subchapter I of Chapter 5 of Title 2. The rules shall
take into account the objective of merchant banks to provide needed capital to businesses and
the nondepository nature of merchant banks.
(June 9, 2001, D.C. Law 13-308, § 322, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-833.01.

Chapter 9
Money Lenders; Licenses.

Section

26-901.

26-905.

Businesses required to procure license
and pay tax; appointment of resident
agent; service of process or notice.

Maximum rate of interest; fees and
charges covered; deduction from prin-
cipal prohibited; statement and re-

Section

ceipts furnished borrower; amount of
loans; violations.

26-907. Violations.

26-910. Exemption of certain persons and busi-
nesses; service of process thereupon.

26-912. Exemption of certain loans; severability.

§ 26-901. Businesses required to procure license and pay tax; appointment of
resident agent; service of process or notice.

(a) It shall be unlawful and illegal to engage in the District of Columbia in the business of
loaning money upon which a rate of interest greater than 6% per annum is charged on any
security of any kind, direct or collateral, tangible or intangible, without procuring license; and
all persons, firms, voluntary associations, joint-stock companies, incorporated societies, and
corporations engaged in said business shall pay a license tax of $500 per annum to the District
of Columbia. No license shall be granted to any person, firm, or voluntary association unless
such person and the members of any such firm or voluntary association shall be bona fide

161

§ 26-901

BANKS AND OTHER FINANCIAL INSTITUTIONS

residents of the District of Columbia, and no license shall be granted for a period longer than
1 year, and no license shall be granted to any joint-stock company, incorporated society, or
corporation unless and until such company, society, or corporation shall, in writing and in due
form, to be first approved by and filed with the Mayor of the District of Columbia, appoint an
agent, resident in the District of Columbia, upon whom all judicial and other process or legal
notice directed to such company, society, or corporation may be served. And in the case of
death, removal from the District, or any legal disability or disqualification of any such agent,
service of such process or notice may be made upon the Director of the Department of
Licenses, Investigation and Inspections of the District of Columbia.

(b) Any license issued pursuant to this section shall be issued as a Financial Services
endorsement to a basic business license under the basic business license system as set forth
in subchapter I-A of Chapter 28 of Title 47 of the District of Columbia Official Code.

(Feb. 4, 1913, 37 Stat. 657, ch. 26, § 1; Mar. 3, 1917, 39 Stat. 1006, eh. 160; Apr. 20, 1999, D.C. Law
12-261, § 2003(r), 46 DCR 3142; Oct 28, 2003, D.C. Law 15-38, § 3(q), 50 DCR 6913.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 15-38, in subsec. (b), substituted "Fi-
nancial Services endorsement to a basic business
license under the basic" for "Class A Financial
Services endorsement to a master business license
under the master".
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 3(q) of Streamlining Regulation Emergency
Act of 2003 (D.C. Act 15-145, August 11, 2003, 50
DCR 6896).

Legislative History of Laws

Law 15-38, the "Streamlining Regulation Act of
2003'-, was introduced in Council and assigned Bill
No. 15-19, which was referred to Committee on
Consumer and Regulatory Affairs. The Bill was
adopted on first and second readings on June 3,
2003, and July 8, 2003, respectively. Signed by the
Mayor on August .11, 2003, it was assigned Act No.
15-146 and transmitted to both Houses of Con-
gress for its review. D.C. Law 15-38 became
effective on October 28, 2003.

Notes of Decisions

2. Construction and application

Under District of Columbia law, substance, rath-
er than form, determines whether usury or loan
sharking laws, civil or criminal, apply to a particu-
lar transaction. Juergens v. Urban Title Services,
Inc., 2007, 246 F.R.D. 4. Consumer Credit ©==> 11;
Usury <£=> 16; Usury e=> 149

The usury statute, and the loan shark statute
which imposes licensing requirements on those in
the business of lending money, read together, as
the lawmakers intended, constitute a comprehen-
sive code for the business of lending money in the
District of Columbia. Rivera v. Schlick, 2005, 887
A.2d 492. Statutes s=> 223.2(16)

4. Protected persons

Lender of money to borrower and his business
partners so they could renovate a house and then
resell it was not in the business of lending money,
and thus, lender was not subject to the loan shark

law, which imposed licensing requirements on
those in the business of lending money; lender
testified that neither he nor his part-time real
estate development company was in the business of
providing loans to anyone and that the loans to
borrower for the renovation project were the "first
and last time" he would do so. Rivera v. Schlick,
2005, 887 A.2d 492. Consumer Credit ©==> 4

5. Foreclosure

If the disputed loan was made by one who was
engaging in the business of lending money in
violation of the loan shark law, and if the loan was
made in the course of that business, then it consti-
tuted an illegal contract under the loan shark law,
which imposes licensing requirements on those in
the business of lending money, and thus, the lend-
er has no recourse to enforce the contract. Rivera
v. Schlick, 2005, 887 A.2d 492. Consumer Credit
€=>17

§ 26-905. Maximum rate of interest; fees and charges covered; deduction
from principal prohibited; statement and receipts furnished bor-
rower; amount of loans; violations.

Notes of Decisions

1. Statutory construction

Under District of Columbia law, substance, rath-
er than form, determines whether usury or loan
sharking laws, civil or criminal, apply to a particu-

lar transaction. Juergens v. Urban Title Services,
Inc., 2007, 246 F.R.D. 4. Consumer Credit <$=> 11;
Usury <S=> 16; Usury &=> 149

162

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-910

§ 26-907. Violations.

Notes of Decisions

1. In general lar transaction. Juergens v. Urban Title Services,

Under District of Columbia law, substance, rath- Inc., 2007, 246 F.R.D. 4. Consumer Credit <3= 11;

er than form, determines whether usury or loan Usury €=? 16; Usury <§=? 149
sharking laws, civil or criminal, apply to a particu-

§ 26-910. Exemption of certain persons and businesses; service of process
thereupon.

(a) Nothing contained in this chapter shall be held to apply to the legitimate business of
national banks, licensed bankers, licensed mortgage brokers, licensed mortgage lenders, any
person exempt from licensure under § 26-1102 if the activity involves making or brokering a
mortgage, trust companies, savings banks, building and loan associations, small business
investment companies licensed and operating under the Small Business Investment Act of
1958, or to life insurance companies. As used in this section the term "life insurance
companies" means and includes any life insurance company authorized to do business in the
District of Columbia pursuant to Chapters 42 to 47 of Title 31 and any other life insurance
company which has a valid, current license to do business as such in any state of the United
States.

(b) Any person or any legal entity exempted from the provisions of this chapter by such
subsection (a) of this section making loans secured on real or personal property in the District
of Columbia who or which does not maintain an office for doing business in the District of
Columbia or a residence in said District where such person or legal entity may be served with
process in any suit arising out of any such transaction or in connection with such property
shall appoint and maintain at all times in the District of Columbia a resident agent upon
whom process may be served in any such suit, and shall register with the Mayor of the
District of Columbia or with his designee the name and address of such resident agent. Any
such person or legal entity which fails to appoint and maintain at all times in the District of
Columbia such resident agent shall not, w 7 hile such failure continues, be entitled to the
exemption provided in this section. Whenever any such person or entity does not have in the
District of Columbia an agent for service of process or such agent cannot with reasonable
diligence be found at his registered address, then the said Mayor or his designee shall be the
agent for the service of process for such person or entity. Service of process on the Mayor or
his designee shall be made by delivering to, and leaving with him, or with any person having
charge of his office, or with his designee, duplicate copies of the process accompanied by a fee
in the amount of $2 and such service shall be sufficient service upon such person or entity. In
the event of such service, the Mayor, or his designee, shall immediately cause one of such
copies to be forwarded by registered or certified mail, addressed to such person or entity at
his or its address, as such address appears on the records of the Mayor or his designee. Any
such service shall be returnable in not less than 30 days unless the rules of the court issuing
such process prescribe another period, in which case such prescribed period shall govern.
Nothing contained in this section shall limit or affect the right to serve any process, notice, or
demand required or permitted by law 7 to be served on any such person or entity in any other
manner now or hereafter permitted by law.

(1) "Community Development Corporation" or "CDC" means any community develop-
ment corporation recognized by, and under contract with, the District of Columbia
Department of Housing and Community Development (or any successor agency) that is
engaged in business and economic development activities in the form of making microloans
through the use of funds loaned to them by nationally or locally chartered banks or
financial institutions for the specific purpose of microlending, and which organization is
organized under Chapter 4 of Title 29, and whose articles of incorporation and bylaws are
consistent with rules and regulations issued by the Mayor of the District of Columbia
pursuant to subchapter IV of Chapter 12 of Title 2.

163

§ 26-910 BANKS AND OTHER FINANCIAL INSTITUTIONS

(2) "Microloans" or "microlending" means a CDC engaging in the practice of making or
issuing any loans up to, and including, $25,000 to any person engaged in business within the
District of Columbia.

(3) "Person" means any natural person, partnership, limited partnership, or corporation,
including corporations taxed under Subchapter S of the Internal Revenue Code.

(d) No money lender license tax contained in this chapter shall be held to apply to a CDC
engaged in microlending where the funds used for the microlending program were loaned to
the CDC by a nationally or locally chartered bank or financial institution for the specific
purpose of microlending, provided that the CDC operates and makes loans only in the
geographical service area defined in their agreements with the District of Columbia Depart-
ment of Housing and Community Development.

(Feb. 4, 1913, 37 Stat. 660, ch. 26, § 10; June 11, I960, 74 Stat. 196, Pub. L. 86-502, § 7; Dec. 5, 1963, 77
Stat. 344, Pub. L. 88-191, § 1; Feb. 24, 1987, D.C. Law 6-188, § 2(d), 33 DCR 7687; Sept. 9, 1996, D.C.
Law 11-155, § 23(a), 43 DCR 4213; Apr. 9, 1997, D.C. Law 11-171, § 2(b), 43 DCR 4484; June 6, 1998,
D.C. Law 12-116, § 4, 45 DCR 1959; July 2, 2011, D.C. Law 18-378, § 3(h), 58 DCR 1720.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 18-378, in subsec. (c)(1), substituted For history of Law 18-378, see notes under

"Chapter 4 of Title 29 " for "subchapter I of . s 26-201
Chapter 3 of Title 29".

§ 26-912. Exemption of certain loans; severability.

Notes of Decisions

Construction and application 2 Inc., 2007, 246 F.R.D. 4. Consumer Credit @=» 11;

Usury <&* 16; Usury &* 149

2. Construction and application
1. In general Mortgage transaction involving loans of $688,000

Under District of Columbia law, substance, rath- and $177,000 was exempt from provisions of Dis-
er than form, determines whether usury or loan trict of Columbia Loan Shark Act. Poblete v.
sharking laws, civil or criminal, apply to a particu- Indymac Bank, 2009, 657 F,Supp.2d 86. Consum-
er transaction. Juergens v. Urban Title Services, er Credit <£=» 4

Chapter 10
Money Transmissions.

Section

26-1027. Receipts.

§ 26-1027. Receipts.

(a) A licensee who receives money or equivalent value for a money transmission shall
provide an itemized receipt to the customer that clearly states the amount of money or the
equivalent value presented by the customer for the money transmission and the fees charged
by the money transmission licensee.

(b) If the licensee fixes, when the money transmission is initiated, the rate of exchange for
a money transmission to be paid in the currency of another government, the receipt provided
by subsection (a) of this section shall disclose the rate of exchange for the transaction and any
limit on the length of time that the payment will be made at that fixed rate of exchange.

(c) If a licensee does not fix the rate of exchange for a money transmission to be paid in the
currency of another government, the receipt provided under subsection (a) of this section
shall disclose that the rate of exchange for the money transmission will be set when the
person designated by the customer to receive the money takes possession of the money.

(d) For the purposes of this section:

164

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-1101

(1) Money is deemed to have been transmitted when it is available to the person
designated by the customer, whether or not the designated person has taken possession of
the money,

(2) The term "fees" shall not include revenue that a licensee or its authorized delegate
generates, in connection with a money transmission, in converting the money of the
government into the money of another government.

(July 18, 2000, D.C. Law 13-140, § 27a, as added Mar. 12, 2011, D.C. Law 18-315, § 3, 57 DCR 12412.)

Historical and Statutory Notes

Legislative History of Laws

For history of Law 18-315, see notes under
§ 26-317.

Chapter 11
Mortgage Lenders and Brokers.

Section

26-1101.

Definitions.

26-1118.

26-1102.

Exemptions.

26-1103.

License requirements.

26-1119.

26-1104.

Issuance of license.

26-1120.

26-1107.

License expiration and renewal; an-
nual fee.

26-1120.01.
26-1120.02.

26-1109.

Record keeping requirements.

26-1110.

Annual report.

26-1112.

Examinations and investigations.

26-1120.03.

26-1113.

Required loan disclosures.

26-1114.

Prohibited practices.

26-1116.

Advertising.

26-1121.

26-1117.

Evasive business tactics.

Suspension, revocation, and enforce-
ment.

Hearing procedures.

Limitation on name of mortgage
business.

Confidential information.

Nationwide Mortgage Licensing Sys-
tem and Registry reporting re-
quirements.

Nationwide Mortgage Licensing Sys-
tem and Registry information chal-
lenge process.

Authority of Superintendent to issue
rules and regulations.

§ 26-1101. Definitions.
For the purposes of this chapter, the term:

(1) "Borrower" means a person who submits an application for a loan secured by a first
or subordinate mortgage or deed of trust on a single to 4-family home.

(1A) "Clerical tasks" means the receipt, collection, and distribution of information
common for the processing or underwriting of a loan in the mortgage industry and
communication with a consumer to obtain information necessary for the processing or
underwriting of a residential mortgage loan.

(IB) "Commissioner" means the Commissioner of the Department of Insurance, Securi-
ties, and Banking.

(2) "Commitment" means a written, specific, binding agreement between a borrower and
a lender which sets forth the terms of the loan being extended to the borrower.

(2A) "Conference of State Bank Supervisors" means the professional association of state
officials responsible for chartering, regulating, and supervising state-chartered commercial
and savings banks and state-licensed branches and agencies of foreign banks.

(2B) "Depository institution" shall:

(A) Have the same meaning as provided in section 3 of the Federal Deposit Insurance
Act, approved September 21, 1950 (64 Stat. 873; 12 U.S.C. § 1813); and

(B) Include any credit union.

(3) "District" means the District of Columbia.

(3A) "Federal banking agency" means the Board of Governors of the Federal Reserve
System, the Comptroller of the Currency, the Director of the Office of Thrift Supervision,
the National Credit Union Administration, or the Federal Deposit Insurance Corporation.

165

§ 26-1101 BANKS AND OTHER FINANCIAL INSTITUTIONS

(4) "Federally approved seller-servicers" means a mortgage lender that has been ap-
proved as a seller-servicer by:

(A) The Federal Home Loan Mortgage Corporation;

(B) The Federal National Mortgage Association; or

(5) "Financing agreement" means a written agreement between a borrower and a lender
which sets forth the terms of a purchase money loan or a refinancing of an existing loan
that:

(A) Results in or is secured by a first or subordinate mortgage or deed of trust on a
single to 4-family home; and

(B) Is offered or extended to the borrower.

(5A) "Independent contractor" means an individual who is required to obtain and
maintain a license under this chapter to engage in residential mortgage loan origination
activities as a loan processor or underwriter.

(6) "Interest in real property" includes:

(A) A confessed judgment note or consent judgment required or obtained by any
person acting as a mortgage lender or mortgage broker for the purpose of acquiring a
lien on residential real property;

(B) A sale and leaseback required or obtained by any person acting as a mortgage
lender or mortgage broker for the purpose of creating a lien on residential real property;

(D) Any other security interest that has the effect of creating a lien on residential real
property in the District of Columbia.

(7) "License" means a license issued by the Superintendent under this chapter to
authorize a person to engage in business as a mortgage loan originator, loan officer,
mortgage lender, or mortgage broker.

(8) "Licensee" means a person who is licensed as a mortgage loan originator, loan officer,
mortgage lender, or mortgage broker under this chapter.

(9) "Loan application" means the submission of a borrower's financial information in
anticipation of a credit decision, whether written or computer-generated, relating to a
mortgage loan. If the submission does not state or identify a specific property, the
submission is an application for a pre-qualification and not an application for a mortgage
loan. The subsequent addition of an identified property to the submission converts the
submission to an application for a mortgage loan.

(9A) "Loan processor or underwriter" means an individual who performs clerical or
support duties as an employee of and at the direction of, and subject to the supervision and
instruction of, a person licensed, or exempt from licensing, under this chapter.

(10) "Mortgage broker" means any person who, for compensation or gain, or in the
expectation of compensation or gain, either directly or indirectly accepts or offers to accept
an application for a mortgage loan, solicits or offers to solicit a mortgage loan on behalf of a
borrower, or negotiates or offers to negotiate the terms and conditions of a mortgage loan
on behalf of a lender.

(11) "Mortgage lender" means:

(A) Any person who:
(i) Repealed.

(ii) Makes a mortgage loan to any person; or

(iii) Engages in the business of servicing mortgage loans for others or collecting or
otherwise receiving mortgage loan payments directly from borrowers for distribution
to any other person.

(B) A mortgage lender does not include:

(i) A financial institution that accepts deposits and is regulated under this title;
(ii) The Federal Home Loan Mortgage Corporation;
(iii) The Federal National Mortgage Association;
(iv) The Government National Mortgage Association; or

166

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1 101

(v) Any person engaged exclusively in the acquisition of all or any portion of a
mortgage loan under any federal, state, or local governmental program of mortgage
loan purchases.

(12) "Mortgage loan" means any loan primarily for personal, family, or household use
that is secured by a mortgage, deed of trust, or other equivalent consensual security
interest on a dwelling, as defined in section 103(v) of the Truth in Lending Act, approved
May 29, 1968 (82 Stat. 147; 15 U.S.C. § 1602(v)), or residential real estate upon which is
constructed, or intended to be constructed, a dwelling.

(12A) "Non-conventional mortgage loan" means any mortgage loan that is not a fixed-
rate mortgage loan with an amortization period of 30 years or less.

(12B)(A) "Mortgage loan originator" or "loan officer" means an individual who:
(i) Takes a residential mortgage application;
(ii) Offers or negotiates terms of a residential mortgage loan; or
(iii) Solicits, or offers to solicit, a mortgage loan on behalf of a borrower for
compensation or gain.
(B) The term shall not include:

(i) An individual who is not otherwise described in subparagraph (A) of this
paragraph;

(ii) An individual or entitv solely involved in extension of credit relating to timeshare
plans, as defined in 11 U.S.C. § 101(53D); or

(iii) An individual who only performs real estate brokerage activities and is licensed
or registered in accordance with District of Columbia law, unless the person is
compensated by a mortgage lender, a mortgage broker, mortgage loan originator, or
loan officer, or by any agent of a mortgage lender, mortgage broker, mortgage loan
originator, or loan officer.
(12C) "Mortgage uniform licensing form" means the SSR application form for mortgage
brokers, mortgage lenders, and mortgage loan originators approved by the Commissioner.
(12D) "Nationwide Mortgage Licensing System and Registry" or "NMLSR" means a
mortgage licensing system developed and maintained by the Conference of State Bank
Supervisors and the American Association of Residential Mortgage Regulators for the
licensing and registration of licensed mortgage loan originators, mortgage lenders, mort-
gage brokers, and loan officers.

(13) "Nonprofit corporation" means a corporation no part of the income of which is
distributable to its members, directors or officers. Nothing in this chapter shall be
construed as prohibiting the payment of reasonable compensation for services rendered and
the making of distribution upon dissolution of final liquidation.

(14) "Person" means an individual, firm, corporation, business trust, estate, trust,
partnership, association, 2 or more persons having a joint or common interest, or any other
legal or commercial entity, or group of individuals however organized.

(15) "Principal" means any person who, directly or indirectly, owns or controls 10% or
more of the outstanding stock of a stock corporation or 10% or greater interest in a
nonstock corporation or a limited liability company.

(15A) "Real estate brokerage activity" means any activity that involves offering or
providing real estate brokerage seivices to the public, including;

(A) Acting as a real estate agent or real estate broker for a buyer, seller, lessor, or
lessee of real property;

(B) Bringing together parties interested in the sale, purchase, lease, rental, or
exchange of real property;

(C) Negotiating, on behalf of any party, any portion of a contract relating to the sale,
purchase, lease, rental, or exchange of real property (other than in connection with
providing financing with respect to any such transaction);

(D) Engaging in any activity for which a person engaged in the activity is required to
be registered or licensed as a real estate agent or real estate broker under any applicable
law; and

(E) Offering to engage in any activity, or act in any capacity, described in subpara-
graph (A), (B), (C), or (D) of this paragraph.

167

§ 26-1101 BANKS AND OTHER FINANCIAL INSTITUTIONS

(15B) "Registered mortgage loan originator" or "registered loan officer" means any
individual who is:

(A) A mortgage loan originator or loan officer;

(B) An employee of:

(i) A depository institution;

(ii) A subsidiary that is owned and controlled by a depository institution and
regulated by a federal banking agency; or

(iii) An institution regulated by the Farm Credit Administration; and

(16) Repealed.

(16A) "Sponsor" means the licensed mortgage lender or mortgage broker with whom the
mortgage loan originator is employed or associated.

(16B) "SRR" means the limited liability corporation which owns and operates the
NMLSR.

(17) "Superintendent" means the Superintendent of the District of Columbia Office of
Banking and Financial Institutions.

(17A) "Takes a residential mortgage loan application" means:

(A) Recording the borrower's application information in any form for use in a credit
decision; or

(B) Receiving the borrower's application information in any form for use in a credit
decision.

(17B) "Unique identifier" means a number or other identifier assigned by protocols
established by the NMLSR.

(18) "Washington, D.C. metropolitan region" means the District of Columbia, the coun-
ties of Montgomery and Prince Georges in the State of Maryland, the counties of Arlington
and Fairfax, and the cities of Alexandria and Falls Church in the Commonwealth of
Virginia,

(Sept. 9, 1996, D.C. Law 11-155, § 2, 43 DCR 4213; June 6, 1998, D.C. Law 12-116, § 2(a), 45 DCR 1959;
Jan. 29, 2008, D.C. Law 17-90, § 2(a), 54 DCR 11925; July 18, 2009, D.C. Law 18-38, § 2(a), 56 DCR
4290.)

Historical and Statutory Notes
Effect of Amendments Temporary Amendments of Section

D.C, Law 17-90 added par. (12A). Section 2(a) of D.C. Law 17-350, in par. (1),

np Tm , iq og ,■„ „ m , n\ ^w^ «^ u~ deleted u to be occupied by the borrower as the

D.C. Law lo-do, in par. (1), deleted to be u , . x . , J „ ,, , ,, A .

. i u 4-u u \i i < • borrower s primary residence ; added pars. (1A),

occupied by the borrower as the borrowers pn- (1B)j (gA)j ^ &b) tQ read as ' foUow8 .

mary residence" following "home"; added pars.
(1A), (IB), (2A), (2B), (3A), (5A), (9A), (12B), (12C)

"(1A) 'Clerical tasks' means the receipt, collec-

(12D), (15A), (15B), (16A),' (16B), (17A), and (17B); £ on ' and distribution of information common for
in par. (5)(A), deleted "to be occupied by the the processing or underwriting of a loan m the
, ^ „ I ' . ,,, „ . 1 \„, *\ /nN mortgage industry and communication with a con-
borrower following home' ; m pars. 7) and (8), ^ * obtain informatian necessary for the pro-
substituted mortgage loan originator, loan officer, cesging Qr underwriting of a res idential mortgage
mortgage lender, for mortgage lender"; rewrote j oan

par. (12); and repealed par. (16). Prior to amend- iU ■,-^,^ </->. ■ ■ > ^

, i /i A\ i /i ^ \ i j? n (1-d) Commissioner means the Commissioner

ment or repeal, pars. (12) and (16) read as follows: of ^ Department of Insurancei Securities, and

"(12) 'Mortgage loan' means any loan or other Banking."

extension of credit that is secured, in whole or in « (2A ) 'Conference of State Bank Supervisors'

part, by any interest in residential real property in means the professional association of state officials

the District of Columbia." responsible for chartering, regulating, and super-

"(16) 'Residential real property' means any own- visin g state-chartered commercial and savings

er-occupied real property located in the District of banks and state-licensed branches and agencies of

Columbia, which property has a dwelling on it foreign banks,

designed principally as a residence with accommo- U (2B) 'Depository institution' shall:

clations for not more than 4 families. This term "(A) Have the same meaning as provided in

does not include any real property held primarily section 3 of the Federal Deposit Insurance Act,

for rental, investment, or the generation of income approved September 21, 1950 (64 Stat. 873; 12

through any commercial or industrial enterprise." U.S.C. § 1813); and

168

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-1101

"(B) Include any credit union.

"(2C) 'Federal banking agency' means the
Board of Governors of the Federal Reserve Sys-
tem, the Comptroller of the Currency, the Director
of the Office of Thrift Supervision, the National
Credit Union Administration, or the Federal De-
posit Insurance Corporation."

; in par. (5) (A), deleted "to be occupied by the
borrower"; added par. (5A) to read as follows:

"(5A) 'Independent contractor' means an indi-
vidual w T ho is required to obtain and maintain a
license under this act to engage in residential
mortgage loan origination activities as a loan pro-
cessor or underwriter."

; in pars. (7) and (8), substituted "mortgage loan
originator, loan officer, mortgage lender" for
"mortgage lender"; added par. (9 A), amended par.
(12), added pars. (12A-i), (12A-ii), (12A-iii), (ISA),
and (15B) to read as follows:

"(9A) 'Loan processor or underwriter' means an
individual who performs clerical or support duties
as an employee of and at the direction of, and
subject to the supervision and instruction of, a
person licensed, or exempt from licensing, under
this act."

"(12) "Mortgage loan" means any loan primarily
for personal, family, or household use that is se-
cured by a mortgage, deed of trust, or other
equivalent consensual security interest on a dwell-
ing, as defined in section 103(v) of the Truth in
Lending Act, approved May 29, 1968 (82 Stat. 147;
15 U.S.C. § 1602(v)), or residential real estate
upon which is constructed, or intended to be con-
structed, a dwelling."

"(12A-i)(A) 'Mortgage loan originator' or 'loan
officer' means an individual who:

"(i) Takes a residential mortgage application;

"(ii) Offers or negotiates terms of a residential
mortgage loan; or

"(iii) Solicits, or offers to solicit, a mortgage loan
on behalf of a borrower for compensation or gain.

"(B) The term shall not include:

"(i) An individual who is not otherwise described
in subparagraph (A) of this paragraph;

"(ii) An individual or entity solely involved in
extension of credit relating to timeshare plans, as
defined in 11 U.S.C. § 101(53D).

"(iii) An individual who only performs real es-
tate brokerage activities and is licensed or regis-
tered in accordance with District of Columbia law,
unless the individual is compensated by a mort-
gage lender, a mortgage broker, mortgage loan
originator, or loan officer, or by any agent of a
mortgage lender, mortgage broker, mortgage loan
originator, or loan officer.

"(12A— ii) 'Mortgage uniform licensing form'
means the SSR application form for mortgage
brokers, mortgage lenders, and mortgage loan
originators approved by the Commissioner.

"(12A— iii) 'Nationwide Mortgage Licensing Sys-
tem and Registry' or 'NMLSR' means a mortgage
licensing system developed and maintained by the

Conference of State Bank Supervisors and the
American Association of Residential Mortgage
Regulators for the licensing and registration of
licensed mortgage loan originators, mortgage lend-
ers, mortgage brokers, and loan officers.

"(15A) 'Real estate brokerage activity' means
any activity that involves offering or providing real
estate brokerage services to the public, including;

"(A) Acting as a real estate agent or real estate
broker for a buyer, seller, lessor, or lessee of real
property;

"(B) Bringing together parties interested in the
sale, purchase, lease, rental, or exchange of real
property;

"(C) Negotiating, on behalf of any party, any
portion of a contract relating to the sale, purchase,
lease, rental, or exchange of real property (other
than in connection with providing financing with
respect to any such transaction);

"(D) Engaging in any activity for which a per-
son engaged in the activity is required to be regis-
tered or licensed as a real estate agent or real
estate broker under any applicable law; and

"(E) Offering to engage in any activity, or act in
any capacity, described in subparagraph (A), (B),
(C), or (D) of this paragraph.

"(15B) 'Registered mortgage loan originator' or
'Registered loan officer' means any individual who
is:

"(A) A mortgage loan originator or loan officer;

"(B) An employee of:

"(i) A depository institution;

"(ii) A subsidiary that is owned and controlled
by a depository institution and regulated by a
federal banking agency; or

"(iii) An institution regulated by the Farm
Credit Administration; and

"(C) Registered with, and maintains a unique
identifier through, the NMLSR."

; repealed par. (16); and added pars. (16A),
(17A), and (17B) to read as follows:

"(16A) 'SRR' means the limited liability corpora-
tion which owns and operates the NMLSR."

"(17A) 'Takes a residential mortgage loan appli-
cation' means:

"(A) Recording the borrower's application infor-
mation in any form for use in a credit decision; or

"(B) Receiving the borrower's application infor-
mation in any form for use in a credit decision.

"(1TB) 'Unique identifier' means a number or
other identifier assigned by protocols established
by the NMLSR."

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2(a) of Mortgage Lender and Broker Emer-
gency Amendment Act of 2008 (D.C. Act 17-617,
December 22, 2008, 56 DCR 189).

169

§ 26-1101 BANKS AND OTHER FINANCIAL INSTITUTIONS

For temporary (90 day) amendment of section, review. D.C. Law 17-90 became effective on Jan-
see § 2(a) of Mortgage Lender and Broker Con- uary 29, 2008.

gressional Review Emergency Amendment Act of Law 18-38, the "Mortgage Lender and Broker
2009 (D.C. Act 18-31, March 16, 2009, 56 DCR Amendment Act of 2009", was introduced in Coun-
2327). cil and assigned Bill No. 18-133, which was re-
j . , ,. „. . ~ j f erred to the Committee on Public Service- and
g " y Consumer Affairs. The Bill was adopted on first
Law 17-90, the "Mortgage Disclosure Amend- anc i second readings on April 7, 2009, and May 5,
ment Act of 2007", was introduced in Council and 2009, respectively. Signed by the Mayor on May
assigned Bill No. 17-167 which was referred to the 21, 2009, it was assigned Act No. 18-89 and trans-
Committee on Public Services and Consumer Af- mitted to both Houses of Congress for its review.
fairs. The Bill was adopted on first and second D.C. Law 18-38 became effective on July 18, 2009.
readings on October 2, 2007, and November 6, Miscellaneous Notes

2007, respectively. Signed by the Mayor on No- Section 4 of D.C. Law 17-90 provides that sec-

vember 27, 2007, it was assigned Act No. 17-208 tion 2 shall apply 30 days after the effective date of

and transmitted to both Houses of Congress for its this act.

Notes of Decisions

Mortgage broker 1 was one of company's principals acted on compa-
ny's behalf in negotiating loan, precluding sum-
mary judgment for either borrower or company on
1. Mortgage broker issue of whether company acted as statutory mort-
Material issues of fact existed as to whether gage broker, as defined under District of Columbia
settlement company acted solely as settlement law, for purposes of borrower's claim under Dis-
agent with respect to borrower's mortgage loan trict of Columbia Home Loan Protection Act
and had no involvement in soliciting loan, or (HLPA). Sloan ex rel. Juergens v. Urban Title
whether company was main driving force behind Sendees, Inc., 2009, 652 F.Supp.2d 40. Federal
efforts to secure mortgage loan and attorney who Civil Procedure <s=> 2491.8

§ 26-1102. Exemptions.
The provisions of this chapter shall not apply to:

(1) Any bank, trust company, savings bank, savings and loan association, or credit union
incorporated or chartered under the laws of the United States, any state or territory of the
United States, or the District, and any other financial institution incorporated or chartered
under the laws of the District or of the United States, that accepts deposits and is
regulated under Title 26 of the District of Columbia Official Code.

(2) Any insurance company authorized to do business in the District;

(3) Any corporate instrumentality of the United States government including:

(A) The Federal Home Loan Mortgage Corporation;

(B) The Federal National Mortgage Association; and

(4) Repealed.

(5) Any person who takes back a deferred purchase money mortgage in connection with
the sale of:

(A) Residential real property owned by, and titled in the name of, that person; or

(B) A new residential dwelling that the person built.

(6) A person making a mortgage loan to a borrower who is the person's spouse, child,
child's spouse, parent, sibling, grandparent, grandchild, or grandchild's spouse;

(7) Nonprofit corporations making mortgage loans to promote home ownership or
improvements for very low, lower, and moderate income households as defined in Chapter
25 of Title 14 of the District of Columbia Municipal Regulations;

(8) Agencies of the federal government, the District, or any state or municipal govern-
ment, or any quasi-governmental agency making mortgage loans under the specific
authority of the laws or regulations of any state, the District, or the United States,
including, without limitation, the Housing Finance Agency of the District of Columbia with
respect to its activities in offering, accepting, completing, and processing mortgage loan
applications under its programs;

170

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-1103

(9) Persons acting as fiduciaries with respect to any employee pension benefit plan
qualified under the Internal Revenue Code who make mortgage loans solely to plan
participants from plan assets;

(10) Persons licensed by the District of Columbia as attorneys, real estate brokers, or
real estate salespersons, not actively and principally engaged in negotiating, placing, or
finding mortgage loans, when rendering services as an attorney, real estate broker, or real
estate salesperson; however, a real estate broker or a real estate salesperson who receives
any fee, commission, kickback, rebate, or other payment for directly or indirectly negotiat-
ing, placing, or finding a mortgage loan for others shall not be exempt from the provisions
of this chapter;

(11) Persons acting in a fiduciary capacity conferred by authority of any court; and.

(12) Persons acting as registered mortgage loan originators.

(Sept. 9, 1996, D.C. Law 11-155, § 3, 43 DCR 4213; June 6, 1998, D.C. Law 12-116, § 2(b), 45 DCR 1959;
May 7, 2002, D.C. Law 14-132, § 601(a)(1), 49 DCR 2551; July 18, 2009, D.C. Law 18-38, § 2(b), 56 DCR
4290.)

Historical and

Effect of Amendments

D.C. Law 14-132 repealed par. (4) which had
read as follows:

"(4) Any person who makes or brokers 3 or
fewer mortgage loans per calendar year;".

D.C. Law 18-38, rewrote par. (1); in par. (10),
deleted "and" from the end; in par. (11), substitut-
ed "; and" for a period at the end; and added par.
(12). Prior to amendment, par. (1) read as follows:

"(1) Any bank, trust company, savings bank,
savings and loan association, or credit union incor-
porated or chartered under the laws of the United
States, any state or territory of the United States,
or the District, and any other financial institution
incorporated or chartered under the laws of the
District or of the United States, that accepts de-
posits and is regulated under this title, and subsid-
iaries and affiliates of such entities which maintain
their principal office or a branch office in the
District of Columbia and in which the lender,
subsidiary, or affiliate is subject to the general
supervision or regulation of, or subject to audit or
examination by, a regulatory body or agency of the
United States, any state or territory of the United
States, or the District;".
Temporary Amendments of Section

Section 2(b) of D.C. Law 17-350, in par. (10),
substituted a semicolon for "; and"; in par. (11),

Statutory Notes

substituted "; and" for a period; and added par.
(12) to read as follows:

"(12) Persons acting as registered mortgage
loan originators, when acting for a federal banking
agency."

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 601(a)(1) of Home Loan Protection Emer-
gency Act of 2002 (D.C. Act 14-295, March 1, 2002,
49 DCR 2534).

For temporary (90 day) amendment of section,
see § 2(b) of Mortgage Lender and Broker Emer-
gency Amendment Act of 2008 (D.C. Act 17-617,
December 22, 2008, 56 DCR 189).

For temporary (90 day) amendment of section,
see § 2(b) of Mortgage Lender and Broker Con-
gressional Review Emergency Amendment Act of
2009 (D.C. Act 18-31, March 16, 2009, 56 DCR
2327).
Legislative History of Laws

For Law 14-132, see notes following § 26-603.

For Law 18-38, see notes following § 26-1101.

Dismissal 1

Notes of Decisions

1. Dismissal

Investment and loan company involved in alleg-
edly fraudulent home loan transaction, upon which
home purchasers brought action, could not be held

indirectly liable under the District of Columbia
Mortgage Lender and Broker Act or the District
of Columbia Home Loan Protection Act based on
liability for civil conspiracy in home purchasers'
action, where civil conspiracy claims had already
been dismissed. Blue v. Fremont Inv. & Loan,
2008, 562 F.Supp.2d 33. Mortgages <3=> 216

§ 26-1103. License requirements.

(a)(1) No person shall engage in business as a mortgage loan originator, loan officer,
mortgage lender, mortgage broker, or any permissible combination thereof, or hold himself
out to the public to be a mortgage loan originator, loan officer, mortgage lender, mortgage
broker, or any permissible combination thereof, unless such person has first obtained a

171

§ 26-1103 BANKS AND OTHER FINANCIAL INSTITUTIONS

license under this chapter. Each licensee shall register with, and maintain a valid unique
identifier issued by, the NMLSR.

(2) Each independent contractor loan processor or underwriter licensed as a mortgage
loan originator shall have, and maintain, a valid unique identifier issued by the NMLSR.

(3) An individual engaging solely in loan processor or underwriting activities, who does
not represent to the public, through advertising or other means of communicating or
providing information, including the use of business cards, stationery, brochures, signs, rate
lists, or other promotional items, that such individual can or will perform any of the
activities of a mortgage loan originator shall not be required to obtain and maintain a
license under this chapter.

(b) To qualify for a license, an applicant shall satisfy the Superintendent that the applicant,
including its members, officers, directors, and principals is of good moral character and has
sufficient financial responsibility, business experience, and general fitness to:

(1) Engage in business as a mortgage loan originator, loan officer, mortgage lender, or
mortgage broker;

(2) Warrant the belief that the business will be conducted lawfully, honestly, fairly, and
efficiently; and

(3) Meet the minimum liquidity and capital requirements as prescribed by the Commis-
sioner.

(b-1) An applicant for a mortgage loan originator's license shall have a sponsor.

(c) The Superintendent may deny an application for a license to any person who has
committed any act prior to the granting of the license that would be a ground for suspension
or revocation of a license under this chapter.

(c-1) The Commissioner shall deny an application if the applicant has:

(1) Had a mortgage loan originator license revoked by any governmental jurisdiction;

(2) Been convicted of, or pled guilty or nolo contendere to, a felony in a domestic,
foreign, or military court during the 7-year period preceding the date of the application for
licensing and registration; or

(3) At any time preceding the date of application, been convicted of, or pled guilty or nolo
contendere to a felony, if such felony involved an act of fraud or dishonesty, a breach of
trust, or money laundering.

(d) To apply for a license an applicant shall:

(1) Complete and sign an application made under oath on the form that the Commission-
er requires;

(2) Comply with all conditions and provisions of the application for licensure.

(e) The application shall include:

(1) If the applicant is an individual, the applicant's name, business address, and tele-
phone number, and residential address and telephone number;

(2) If the applicant is a partnership, limited liability company, or other noncorporate
business association, the business name, business address, and telephone number, and the
residential address and telephone number of each:

(A) General partner, if the applicant is a limited partnership;

(B) General partner who holds an interest in the partnership of more than 10%, if the
applicant is a general partnership; or

(3) If the applicant is a corporation:

(A) The name, address, and telephone number of the corporate entity; and

(B) The name, business telephone number, and residential address and telephone
number of the president, senior vice presidents, secretary, and treasurer, each director
and each stockholder owning or controlling 10% or more of any class of stock in the
corporation;

(4) The name under which the mortgage lender or mortgage broker business is to be
conducted;

172

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1103

(5) The name and address of the applicant's registered agent, if any;

(6) The address of the location of the business to be licensed;

(7) Whether the applicant seeks a license to act as a mortgage loan originator, loan
officer, mortgage lender, mortgage broker, or any permissible combination thereof; and

(8) Such other information concerning the financial responsibility, background, experi-
ence, and activities of the applicant and its members, officers, directors, and principals as
the Superintendent may require.

(f) With each application for licensure, the applicant shall pay the applicable fees pre-
scribed by the Commissioner and any third-party fees.

(g) The Superintendent may, from time to time, increase or decrease the fees set forth in
this section. The fees shall be fixed at such rates, and computed on such bases and in such
manner as may, in the judgement of the Superintendent, be necessary to defray the
approximate costs of carrying out the regulatory functions set forth in this chapter. These
fees shall not be abated by surrender, suspension, or revocation of a license.

(h) For each license for which an applicant applies, the applicant shall:

(1) Submit a separate application;

(2) Pay a separate license fee;

(3) (A) File a separate surety bond or other financial guaranty under subsection (i) of this
section;

(B) The applicant shall demonstrate that the applicant has met net worth and surety
bond requirements or, as prescribed by the Commissioner, paid into a District of
Columbia fund;

(4) Meet educational requirements prescribed by the Commissioner;

(5) Provide proof of compliance with pre-licensure testing and post-licensure continuing
education requirements as prescribed by the Commissioner; and

(6) Comply with any other requirement prescribed by the Commissioner.

(h-l)(l) The Commissioner shall require, by rule, that an applicant applying for licensure
under this chapter, and any such other person as the Commissioner considers appropriate,
submit his name, contact information and other identifying information, fingerprints, written
consent to a criminal background check, an independent credit report, and information
related to any administrative, civil, or criminal findings by any governmental jurisdiction with
the applicant's application.

(2) For the purposes of this chapter, the Commissioner may use the NMLSR as an agent

for requesting information from, and distributing information to, the Federal Bureau of

Investigation, the Department of Justice, any governmental agency, or any source so

directed by the Commissioner.

(h-2) The Commissioner may waive or defer any licensing requirement, other than
requirements mandated by sections 1505, 1506, and 1508 (d) of the Housing and Economic
Recovery Act of 2008, approved July 30, 2008 (122 Stat. 2816; 12 U.S.C. § 5105, 5106, and
5108 (d)), for good cause shown in writing.

(i) An applicant for an original license or for the renewal of a license shall file a surety
bond with each original application and any renewal application for the license.

(1) The surety bond shall:

(A) Run to the Commissioner for the benefit of the District and any person who has
been damaged by a licensee as a result of violating any law or regulation governing the
activities of mortgage loan originators, mortgage lenders, or mortgage brokers;

(B) Be issued by a surety company authorized to do business in the District;

(C) Be conditioned upon the applicant complying with all District laws regulating the
activities of mortgage lenders, mortgage brokers, and mortgage loan lending and
performing all written agreements with borrowers or prospective borrowers, accounting
for all funds received by the licensee in conformity with a standard system of accounting
consistently applied; and

(D) Be continuously maintained thereafter for as long as any license issued under this
chapter remains in force.

(2) Repealed.

173

§ 26-1103

BANKS AND OTHER FINANCIAL INSTITUTIONS

(3) Repealed.

(4) Repealed.

(5) Any person who may be damaged by noncompliance of a licensee with any condition
of such bond may proceed on such bond against the principal or surety thereon, or both, to
recover damages. Regardless of the number of years the bond remains in effect, the
number of premiums paid, the number of renewals of the license, or the number of claims
made, the aggregate liability under the bond shall not exceed the penal sum of the bond.

(6) Surety bond requirements shall be prescribed by the Commissioner.

(j) Any license issued pursuant to this section shall be issued as a Financial Services
endorsement to a basic business license under the basic business license system as set forth
in subchapter I-A of Chapter 28 of Title 47 of the District of Columbia Official Code.

(Sept, 9, 1996, D.C. Law 11-155, § 4, 43 DCR 4213; June 6, 1998, D.C. Law 12-116, § 2(c), 45 DCR 1960;
Apr. 20, 1999, D.C. Law 12-261, § 2003(s), 46 DCR 3142; Oct. 3, 2001, D.C. Law 14-28, § 3202(a), 48
DCR 6981; Oct. 28, 2003, D.C, Law 15-38, § 3(r), 50 DCR 6913; July 18, 2009, D.C. Law 18-38, § 2(c), 56
DCR 4290.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 14-28 rewrote subsec. (f)(3), which had
read:

"(3) A license fee of $500."

D.C. Law 15-38, in subsec. (j), substituted "Fi-
nancial Services endorsement to a basic business
license under the basic" for "Class A Financial
Services endorsement to a master business license
under the master".

D.C. Law 18-38 rewrote the section, which had
read as follows:

"(a) No person shall engage in business as a
mortgage lender or mortgage broker, or both, or
hold himself out to the public to be a mortgage
lender or mortgage broker for 60 days after Sep-
tember 9, 1996, unless such person has first ob-
tained a license under this chapter.

"(b) To qualify for a license, an applicant shall
satisfy the Superintendent that the applicant, in-
cluding its members, officers, directors, and princi-
pals is of good moral character and has sufficient
financial responsibility, business experience, and
general fitness to:

"(1) Engage in business as a mortgage lender or
mortgage broker;

"(2) Warrant the belief that the business will be
conducted lawfully, honestly, fairly, and efficiently;
and

"(3) In the case of an applicant for a license to
act as a mortgage lender, capitalize the business
by maintaining at least $200,000 of funds available,
and in the case of an applicant for a license to act
as a mortgage broker, capitalize the business by
maintaining at least $10,000 of funds available.

"(c) The Superintendent may deny an applica-
tion for a license to any person who has committed
any act prior to the granting of the license that
would be a ground for suspension or revocation of
a license under this chapter.

"(d) To apply for a license an applicant shall:

"(1) Complete, sign, and submit to the Superin-
tendent an application made under oath on the
form that the Superintendent requires; and

"(2) Comply with all conditions and provisions of
the application for licensure.

"(e) The application shall include:

"(1) If the applicant is an individual, the appli-
cant's name, business address, and telephone num-
ber, and residential address and telephone num-
ber;

"(2) If the applicant is a partnership, limited
liability company, or other noncorporate business
association, the business name, business address,
and telephone number, and the residential address
and telephone number of each:

"(A) General partner, if the applicant is a limit-
ed partnership;

"(B) General partner who holds an interest in
the partnership of more than 10%, if the applicant
is a general partnership; or

"(C) Member, if the applicant is a limited liabili-
ty company or a noncorporate business association;

"(3) If the applicant is a corporation:

"(A) The name, address, and telephone number
of the corporate entity; and

"(B) The name, business telephone number, and
residential address and telephone number of the
president, senior vice presidents, secretary, and
treasurer, each director and each stockholder own-
ing or controlling 10% or more of any class of
stock in the corporation;

"(4) The name under which the mortgage lender
or mortgage broker business is to be conducted;

"(5) The name and address of the applicant's
registered agent, if any;

"(6) The address of the location of the business
to be licensed;

"(7) Whether the applicant seeks a license to act
as a mortgage lender, mortgage broker, or both;
and

"(8) Such other information concerning the fi-
nancial responsibility, background, experience, and
activities of the applicant and its members, offi-
cers, directors, and principals as the Superinten-
dent may require.

174

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-1103

"(f) With each application, the applicant shall
pay to the Superintendent:

"(1) A nonrefundable investigation fee of $100;

"(2) A nonrefundable application fee of $500;
and

"(3) A license fee of $500 for a mortgage broker
license, $600 for a mortgage lender license, or $700
for a dual mortgage broker and lender license.

"(g) The Superintendent may, from time to
time, increase or decrease the fees set forth in this
section. The fees shall be fixed at such rates, and
computed on such bases and in such manner as
may, in the judgement of the Superintendent, be
necessary to defray the approximate costs of car-
rying out the regulatory functions set forth in this
chapter. These fees shall not be abated by surren-
der, suspension, or revocation of a license.

"(h) For each license for which an applicant
applies, the applicant shall:

"(1) Submit a separate application;

"(2) Pay a separate license fee; and

"(3) File a separate surety bond or other finan-
cial guaranty under subsection (i) of this section.

"(i) An applicant for an original license or for
the renewal of a license shall file a surety bond
with each original application and any renewal
application for the license.

"(1) The surety bond shall:

"(A) Run to the Superintendent for the benefit
of any person who has been damaged by a licensee
as a result of violating any law or regulation
governing the activities of mortgage lenders or
mortgage brokers;

"(B) Be issued by a surety company authorized
to do business in the District;

"(C) Be conditioned upon the applicant comply-
ing with all District laws regulating the activities
of mortgage lenders, mortgage brokers, and mort-
gage loan lending and performing all written
agreements with borrowers or prospective borrow-
ers, accounting for all funds received by the licen-
see in conformity with, a standard system of ac-
counting consistently applied; and

"(D) Be continuously maintained thereafter for
as long as any license issued under this chapter
remains in force.

"(2) If an applicant has not conducted business
in the District in any of the 3 calendar years
preceding the year in which an original application
for a license is filed, the surety bond required
under this subsection shall be in the amount of
$12,500.

"(3) If an applicant has conducted business as a
mortgage lender or mortgage broker in the Dis-
trict in any of the 3 calendar years preceding the
year in which an original or renewal application is
filed, the applicant shall provide a sworn statement
setting forth the total dollar amount of mortgage
loans applied for and accepted or mortgage loans
applied for, procured, and accepted by the mort-
gage lender or mortgage broker during the latest
calendar year such business was conducted. The

bond required in this circumstance shall be deter-
mined as follows:

"(A) Where the total dollar amount of stated
loans was $1,000,000 or less, the bond shall be in
the amount of $12,500;

"(B) Where the total dollar amount of stated
loans was more than $1,000,000 but not more than
$2,000,000, the bond shall be in the amount of
$17,500;

"(C) Where the total dollar amount of stated
loans was more than $2,000,000 but not more than
$3,000,000, the bond shall be in the amount of
$25,000; and

"(D) Where the total dollar amount of stated
loans was more than $3,000,000, the bond shall be
in the amount of $50,000.

"(4) Subject to approval by the Superintendent,
if an applicant files 4 or more original or renewal
applications at the same time, the applicant may
provide a blanket surety bond for all licensed
offices in the amount of $200,000.

"(5) Any person who may be damaged by non-
compliance of a licensee with any condition of such
bond may proceed on such bond against the princi-
pal or surety thereon, or both, to recover damages.
The aggregate liability under the bond shall not
exceed the penal sum of the bond.

"(j) Any license issued pursuant to this section
shall be issued as a Financial Services endorse-
ment to a basic business license under the basic
business license system as set forth in subchapter
I-A of Chapter 28 of Title 47 of the District of
Columbia Official Code."
Temporary Amendments of Section

Section 2(c) of D.C. Law 17-350 rewrote sub-
sees, (a), (b)(1), and (b)(3) to read as follows:

"(a)(1) No person shall engage in business as a
mortgage loan originator, loan officer, mortgage
lender, mortgage broker, or any permissible com-
bination thereof, or hold himself out to the public
to be a mortgage loan originator, loan officer,
mortgage lender, mortgage broker, or any permis-
sible combination thereof, unless such person has
first obtained a license under this act. Each licen-
see shall register with and maintain a valid unique
identifier issued by the NMLSR.

"(2) Each independent contractor loan processor
or underwriter licensed as a mortgage loan origi-
nator shall have, and maintain, a valid unique
identifier issued by the NMLSR.

"(3) An individual engaging solely in loan pro-
cessor or underwriting activities, who does not
represent to the public, through advertising or
other means of communicating or providing infor-
mation, including the use of business cards, sta-
tionery, brochures, signs, rate lists, or other pro-
motional items, that such individual can or will
perform any of the activities of a mortgage loan
originator shall not be required to obtain and
maintain a license under this act."

"(1) Engage in business as a mortgage loan
originator, loan officer, mortgage lender, or mort-
gage broker;"

175

§ 26-1103

BANKS AND OTHER FINANCIAL INSTITUTIONS

"(3) Meet the minimum liquidity and capital re-
quirements as prescribed by the Commissioner."

; added subsec. (c-1) to read as follows:

"(c-1) The Commissioner shall deny an applica-
tion if the applicant has:

"(1) Had a mortgage loan originator license re-
voked by any governmental jurisdiction;

"(2) Been convicted of, or pled guilty or nolo
contendere to, a felony in a domestic, foreign, or
military court during the 7-year period preceding
the date of the application for licensing and regis-
tration; or

"(3) At any time preceding such date of applica-
tion, been convicted of, or pled guilty or nolo
contendere to a felony, if such felony involved an
act of fraud or dishonesty, a breach of trust, or
money laundering."

; rewrote subsecs. (d)(1), (e)(7), and (f) to read
as follows:

"(1) Complete and sign an application made un-
der oath on the form that the Commissioner re-
quires."

"(7) Whether the applicant seeks a license to act
as a mortgage loan originator, loan officer, mort-
gage lender, mortgage broker, or any permissible
combination thereof; and"

"(f) With each application for licensure, the ap-
plicant shall pay the applicable fees prescribed by
the Commissioner and any third-party fees."

; in subsec. (h)(2), deleted "and" at the end; in
subsec. (h)(3), substituted a semicolon for a period,
designated the existing text as subpar. (A) and
added subpar. (B) to read as follows:

"(B) The applicant shall demonstrate that the
applicant has met net worth and surety bond re-
quirements or, as prescribed by the Commissioner,
paid into a District of Columbia fund."

; added subsecs. (h)(4) through (6) to read as
follows:

"(4) Meet educational requirements prescribed
by the Commissioner;

"(5) Provide proof of compliance with pre-licen-
sure testing and post-licensure continuing edu-
cation requirements as prescribed by the Commis-
sioner; and

"(6) Comply with any other provision prescribed
by the Commissioner."

; added subsec. (h-1) to read as follows:

"(h-1) The Commissioner shall require, by rule,
that an applicant, and any such other person as the
Commissioner considers appropriate, applying for
licensure under this act, submit his name, contact

information and other identifying information, fin-
gerprints, written consent to a criminal back-
ground check, an independent credit report, and
information related to any administrative, civil, or
criminal findings by any governmental jurisdiction
with the applicant's application. For the purposes
of this act, the Commissioner may use the NMLSR
as an agent for requesting information from, and
distributing information to, the Federal Bureau of
Investigation, the Department of Justice, any gov-
ernmental agency, or any source so directed by the
Commissioner."

; in subsec. (i), substituted "mortgage lenders,
mortgage brokers, mortgage loan originators, or
loan officers" for "mortgage lenders or mortgage
brokers" in par. (1)(A), repealed pars. (2) through
(4), and added par. (6) to read as follows:

"(6) Surety bond requirements shall be pre-
scribed by the Commissioner.".

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2902 of Fiscal Year 2002 Budget Support
Emergency Act of 2001 (D.C. Act 14-124, August
3, 2001, 48 DCR 7861).

For temporary (90 day) amendment of section,
see § 3(r) of Streamlining Regulation Emergency
Act of 2003 (D.C. Act 15-145, August 11, 2003, 50
DCR 6896).

For temporary (90 day) amendment of section,
see § 2(c) of Mortgage Lender and Broker Emer-
gency Amendment Act of 2008 (D.C. Act 17-617,
December 22, 2008, 56 DCR 189).

For temporary (90 day) amendment of section,
see § 2(c) of Mortgage Lender and Broker Con-
gressional Review Emergency Amendment Act of
2009 (DC. Act 18-31, March 16, 2009, 56 DCR

2327).

Legislative History of Laws

For Law 14-28, see notes following § 26-131.10.
For Law 15-38, see notes following § 26-901.
For Law 18-38, see notes following § 26-1101.
Miscellaneous Notes
Section 3 of D.C. Law 18-38 provides:
"Sec. 3. Applicability.

"Except for section 2(c)(1), (g), (j), and (o), this
act shall not apply until the Commissioner of the
Department of Insurance, Securities, and Banking
has promulgated rules implementing this act."

Notes of Decisions

Standing 1

1. Standing

Federal savings association satisfied actual inju-
ry requirement for standing to sue District of

Columbia (D.C.) alleging that Home Owners' Loan
Act (HOLA) preempted implementing regulations
of DC. statute requiring that persons engaged in
mortgage lending activities, including marketing,
be licensed and overseen by D.C; although regula-
tions exempted federal savings associations, associ-
ation's use of independent contractor agents was

176

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1104

business opportunity, denial of which constituted services. State Farm Bank, F.S.B. v. District of
injury, and association had to pay for costs of fees Columbia, 2009, 640 F.Supp,2d 17. Declaratory
and exams in order to have its agents market its Judgment ©^ 300

§ 26-1104. Issuance of license.

(a) When an applicant for a license files the application and bond and pays the fees
required by this chapter, the Superintendent shall investigate to determine if the applicant
meets the requirements of this chapter. The Superintendent shall make such investigations
as deemed necessary to determine if the applicant has complied with all applicable provisions
of law and any regulations promulgated thereunder.

(b) The Superintendent shall approve or deny each application for a license within 60 days
after the date from when the application and bond are filed and the fees are paid.

(d) Every license shall remain in force until it has been surrendered, revoked, or suspend-
ed. The surrender, revocation, or suspension of a license shall not affect any pre-existing
legal right or obligation of such licensee.

(1) A license issued under this section authorizes the licensee to act as mortgage lender,
mortgage broker, mortgage loan originator, or loan officer under the license at the licensed
place of business.

(2) Only 1 place of business may be maintained under any 1 license.

(3) A licensee may maintain more than 1 license under this section provided that a
separate application for each license is made pursuant to § 26-1103 and the Superintendent
approves such application.

(e)(1) The Superintendent shall include on each license:

(A) The name of the licensee; and

(B) The address at which the business is to be conducted.

(2) A person may not conduct any mortgage loan business at any location or under any
name different from the address and name that appears on the person's license.

(f)(1) A licensee may not receive any application for a loan or allow any note or contract for
a loan or mortgage, evidence of any note or contract for a loan or mortgage, or evidence of
indebtedness to be signed or executed at any place for which the licensee does not have a
license, except at the office of:

(A) The attorney for the borrower or for the licensee; or

(B) A title insurance company, a title company, or an attorney for a title insurance
company or a title company.

(2) Notwithstanding paragraph (1)(A) of this subsection, a licensee may accept a loan
application from a borrower by mail or telephone or in person at the borrower's residence
or place of employment to accommodate the borrower at the borrower's request.

(3) The Superintendent shall adopt regulations to ensure that the loan application
process is conducted fairly and in a manner consistent with the best interests of both the
borrower and mortgage lender.

(g) A license may be issued under this chapter to a business entity whose principal office is
located outside the District provided that the business entity maintains a resident agent
within the District at all times during the term of the license, regardless of whether:

(1) The business entity maintains any office within the District; and

(2) The activities of the business entity constitute doing business or having a tax situs in
the District.

(h) Each license shall be prominently posted in each place of business of the licensee.
Licenses shall not be transferable or assignable, by operation of law or otherwise. No
licensee shall use any name other than the name set forth on the license issued by the
Superintendent.

(Sept. 9, 1996, D.C. Law 11-155, § 5, 43 DCR 4213; July 18, 2009, D.C. Law 18-38, § 2(d), 56 DCR 4290.)

177

§ 26-1104 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes

Effect of Amendments and, in subsec. (d)(1), substituted "mortgage lend-

D.C. Law 18-38, in subsec. (d)(1), substituted er, mortgage broker, mortgage loan originator, or

"mortgage lender, mortgage broker, mortgage loan officer" for "mortgage lender or mortgage

loan originator, or loan officer" for "mortgage broker".

lender or mortgage broker". gection 5(b) of D c Uw 17 _ 35Q provideg ^

Temporary Amendments of Section the act shall expire after 225 days of its having

Section 2(d) of D.C. Law 17-350, in subsec. (c), taken effect,

inserted the following sentence at the end: "To ^ A , A ,

assist in the performance of the Commissioner's Emergency Act Amendments

duties under this act, the Commissioner may con- For temporary (90 day) amendment of section,

tract with a third party, including the SRR, the see § 2(d) of Mortgage Lender and Broker Emer-

Conference of State Bank Supervisors, or its affili- gency Amendment Act of 2008 (D.C. Act 17-617,

ates or subsidiaries, to perform any functions, in- December 22, 2008, 56 DCR 189).

eluding the collection of licensing and processing For temporary (90 day) amendment of section,

fees, collection of contact information and other see § 2(d) of Mortgage Lender and Broker Con-

identilymg information, fingerprints, written con- gressional Review Emergency Amendment Act of

sent to a criminal background check personal his- 2009 (D c Act 18 _ 31j Marc ' h 16 20Q9 56 DCR

tory and experience, and conduct oi examinations 9 r> 27)
related to mortgage loan originator, loan officer,

mortgage lender, or mortgage broker activities, Legislative History of Laws

that the Commissioner may consider appropriate."; For Law 18-38, see notes following § 26-1101.

§ 26-1107. License expiration and renewal; annual fee.

(a)(1) A license issued under this chapter shall expire on a date to be determined by the
Superintendent; provided, that the initial term of the license shall be not less than 180 days,
or greater than 18 months, after the effective date of the license. A license may thereafter be
renewed for one-year term extensions as provided by this section.

(2) The Superintendent may change the expiration date of a license for the purpose of
staggering the expiration dates of licenses issued under this chapter; provided, that the new
expiration date shall not be less than 180 days after the effective date or renewal date of
the license.

(b) Before a license expires, the licensee periodically may renew the license for additional
1-year terms, if the licensee:

(1) Demonstrates that he or she continues to meet the licensing standards under this
chapter and has satisfied the annual continuing education requirements under this chapter;

(1A) Pays all applicable fees and assessments as prescribed by the Commissioner and all
third-party fees;

(2) Submits to the Superintendent a renewal application on the form that the Superinten-
dent requires; and

(3) Files a bond or bond continuation certificate for the amount required under
§ 26-1103.

(c) If a license is issued for less than a full year, is surrendered voluntarily, is suspended,
or is revoked, the Superintendent may not refund any part of the license fee regardless of the
time remaining in the license year.

(d) Repealed.

(Sept. 9, 1996, D.C. Law 11-155, § 8, 43 DCR 4213; Apr, 3, 2001, D.C. Law 13-239, § 2, 48 DCR 606;
Oct. 3, 2001, D.C. Law 14-28, § 3202(b), 48 DCR 6981; July 18, 2009, D.C. Law 18-38, § 2(e), 56 DCR
4290.)

Historical and Statutory Notes

Effect of Amendments D.C. Law 14-28 rewrote subsec. (d) which had

D.C. Law 13-239 rewrote subsec. (a) which had read:

read: "(d) In order to defray the costs of their exami-

. nation, supervision, and regulation, every mort-

(a) A license expires on the December 31 after gage lender requ ired to be licensed under this

its effective date unless the license is renewed for chapter shall pay an annual renewal fee calculated

a 1-year term as provided in this section." in accordance with a schedule set by regulation

178

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-1109

promulgated by the Superintendent, The schedule
shall bear a reasonable relationship to the total
assets of such individual mortgage lenders and to
other factors relating to their supervision and reg-
ulation. Every mortgage broker required to be
licensed under this chapter shall pay an annual
renewal fee calculated in accordance with a sched-
ule set by regulation promulgated by the Superin-
tendent. All such fees shall be assessed on or
before April 25, for that calendar year, and on or
before April 25 for every calendar year thereafter.
All such fees shall be paid by the licensed mort-
gage lenders and mortgage brokers to the Super-
intendent on or before May 25 of each calendar
year or within 80 days of the receipt of each
assessment."

D.C. Law 18-38 rewrote subsec. (b)(1); added
subsec. (b)(lA); and repealed subsec. (d). Prior to
amendment or repeal, subsecs. (b)(1) and (d) read
as follows:

"(1) Otherwise is entitled to be licensed;"

"(d) To defray the costs of their examination,
supervision, and regulation, every mortgage lender
and mortgage broker required to be licensed under
this chapter shall pay an annual renewal fee and
examination fee as follows:

"(1) At the time the licensee submits its applica-
tion for renewal, the licensee shall pay a renewal
fee of $900 for a mortgage broker license, $1,000
for a mortgage lender license, or $1,200 for a dual
mortgage broker and lender license.

(2) "At the time the licensee is examined, the
licensee shall pay an examination fee of $400, plus
$6.60 per loan brokered in the expiring license
period, for a mortgage broker license; $800, plus
$6.60 per loan made, originated, brokered, or ser-
viced in the expiring license period, for a mortgage
lender license; or $1,200, plus $6.60 per loan made,
originated, brokered, or serviced in the expiring
license period, for a dual mortgage broker and
lender license."
Temporary Amendments of Section

Section 2(e) of D.C. Law 17-350, in subsec. (d),
repealed pars. (1) and (2) and added pars. (3) and
(4) to read as follows:

"(3) With each renewal application, the applicant
shall demonstrate, that the applicant continues to
meet the minimum standards for license issuance
under this act and that the applicant has satisfied
the annual continuing education requirements un-
der this act.

"(4) With each renewal application, the applicant
shall pay all applicable fees and assessments as
prescribed by the Commissioner and all third-
party fees."

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2 of the Mortgage Lender and Broker Li-
cense Renewal Emergency Amendment Act of
2000 (D.C. Act 13-523, December 30, 2000, 48
DCR 622).

For temporary (90 day) amendment of section,
see § 2(e) of Mortgage Lender and Broker Emer-
gency Amendment Act of 2008 (D.C. Act 17-617,
December 22, 2008, 56 DCR 189).

For temporary (90 day) amendment of section,
see § 2(e) of Mortgage Lender and Broker Con-
gressional Review Emergency Amendment Act of
2009 (D.C. Act 18-31, March 16, 2009, 56 DCR

2327).

Legislative History of Laws

Law 13-239, the "Mortgage Lender and Broker
License Renewal Amendment Act of 2000", was
introduced in Council and assigned Bill No. 13-708,
which was referred to the Committee on Consumer
and Regulatory Affairs. The Bill was adopted on
first and second readings on November 8, 2000,
and December 5, 2000, respectively. Signed by
the Mayor on December 21, 2000, it w*s assigned
Act No. 13-517 and transmitted to both Houses of
Congress for its review. D.C. Law 13-239 became
effective on April 3, 2001.

For Law 14-28, see notes under § 26-131.01.

For Law 18-38, see notes following § 26-1101.

§ 26-1109. Record keeping requirements.

(a) Each licensee shall keep and make available to the Superintendent at the licensee's
place of business any books and records that the Superintendent, by rule or regulation,
requires to enable the Superintendent to enforce this chapter and any rule or regulation
adopted under this chapter.

(b) Each mortgage lender required to be licensed under this chapter shall retain for at
least 3 years after final payment is made on any mortgage loan or after the mortgage loan is
sold, whichever first occurs, copies of the note, settlement statement, truth-in-lending
disclosure, and such other papers or records relating to the loan as may be required by rule
or regulation.

(c) On approval of the Superintendent, a licensee need not keep at the licensee's place of
business any books and records otherwise required by the Superintendent under subsection
(a) of this section if the licensee:

(1) Is a federally approved seller-servicer; or

179

§ 26-1109 BANKS AND OTHER FINANCIAL INSTITUTIONS

(2)(A) Makes the books and records available to the Superintendent at the licensee's

place of business within 5 business days of the Superintendent's official request; and

(B) Retains the records for at least 60 months in a storage facility disclosed to the

Superintendent.

(d) Each independent contractor or mortgage broker required to be licensed under this

chapter shall retain for at least 3 years after a mortgage loan is made the original contract for

his or her compensation, a copy of the settlement statement, an account of fees received in

connection with the loan, and such other papers or records as may be required by rule or

regulation.

(Sept. 9, 1996, D.C. Law 11-155, § 10, 43 DCR 4213; July 18, 2009, D.C. Law 18-38, § 2(f), 56 DCR 4290.)

Historical and Statutory Notes

Effect of Amendments Emergency Act Amendments

D.C. Law 18-38, in subsec. (d), substituted "in- For temporary (90 day) amendment of section,

dependent contractor or mortgage broker" for see § 2(f) of Mortgage Lender and Broker Emer-

"morteaffe broker'' £ enc y Amendment Act of 2008 (D.C. Act 17-617,

s s ■ ' December 22, 2008, 56 DCR 189).

Temporary Amendments of Section T ^ , mA , , , , „ ,.

r - ror temporary (90 day) amendment of section,

Section 2(f) of D.C. Law 17-350, in subsec. (d), see § 2 (f) of Mortgage Lender and Broker Con-
substituted "independent contractor or mortgage gressional Review Emergency Amendment Act of
broker" for "mortgage broker". 2009 (D.C. Act 18-31, March 16, 2009, 56 DCR

Section 5(b) of D.C. Law 17-350 provides that 2 327).

the act shall expire after 225 days of its having Legislative History of Laws

taken effect. For Law 18-38, see notes following § 26-1101.

§ 26-1110. Annual report.

(a) Each mortgage lender or mortgage broker required to be licensed under this chapter
shall annually, on or before March 31, file a written report with the Superintendent containing
such information as the Superintendent may require concerning the licensee's operations
during the preceding calendar year as to each licensed place of business. Reports shall be
accompanied by a sworn affidavit and in the form prescribed by the Superintendent who shall
make and publish annually an analysis and recapitulation of the reports.

(b) Annual reports shall include:

(1) The number and total dollar amount of mortgage loans which were originated or
purchased by the licensee in the District during each fiscal year for which a valid license is
maintained by the licensee;

(2) The number and dollar amount of all loans where the applicant filed notices of intent
to foreclose in the last year, including the borrower's:

(A) Address;

(B) Tract income level;

(D) Census tract where the property is located; and

(3) The number of loans brokered, originated, made, and serviced under Chapter 11A of
this title.

(c) Any information relating to mortgage loans required to be maintained under subsection
(b) of this section shall be itemized in order to disclose for each such item:

(1) The number and dollar amount of mortgage loans made to mortgagors who did not,
at the time of execution of the mortgage, intend to reside in the property securing the
mortgage; and

(2) The number and dollar amount of mortgage loans and completed application involving
mortgagors or mortgage applicants grouped according to census tract, income level, racial
characteristics and gender.

(Sept. 9, 1996, D.C. Law 11-155, § 11, 43 DCR 4213; May 7, 2002, D.C. Law 14-132, § 601(a)(2), 49 DCR

2551).

180

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1112

Historical and Statutory Notes

Effect of Amendments gency Act of 2002 (D.C. Act 14-295, March 1, 2002,

D.C. Law 14-132 made nonsubstantive changes 49 DCR 2534).
in subsecs. (b)(1) and (b)(2)(D); and added subsec. Legislative History of Laws

Emergency Act Amendments For Law 14 " 132 ' see notes followin £ § 26 " 603 -

For temporary (90 day) amendment of section,
see § 601(a)(2) of Home Loan Protection Emer-

§ 26-1112. Examinations and investigations.

(a) The Superintendent, or his or her designated agent, shall examine the affairs, business,
premises, and records of each licensee at least once in every 3 year period and at any other
time the Superintendent reasonably considers necessary.

(b)(1) Any person aggrieved by the conduct of a licensee under this subsection in
connection with a mortgage loan may file a written complaint with the Superintendent who
shall investigate the complaint.

(2) The Superintendent may make any other examination or investigation of any person

if the Superintendent has reasonable cause to believe that the person has violated any

provision of this chapter, any regulation adopted under this chapter, or any other law

regulating mortgage loan lending in the District.

(c) In the course of any investigation or examination, the owners, member, officers,
directors, partners, and any employees of such mortgage lender or mortgage broker being
investigated or examined shall afford the Superintendent full access to all premises, books,
and records. For the foregoing purposes, the Superintendent, or his or her designated agent,
shall have authority to administer oaths, examine under oath all the aforementioned persons,
compel the production of papers and objects of all kinds, subpoena documents or other
evidence, and summons and examine under oath any person whose testimony the Superinten-
dent requires.

(d)(1) If any person fails to comply with a subpoena or summons of the Superintendent
under this chapter or to testify concerning any matter about which the person may be
interrogated under this chapter, the Superintendent may file a petition for enforcement with
the Civil Actions Branch of the Superior Court of the District of Columbia.

(2) On petition by the Superintendent, the court may order the person to attend and

testify or produce evidence.

(e) When it becomes necessary to examine or investigate the books and records of a
licensee required to be licensed under this chapter at a location outside the Washington, D.C.
metropolitan region, the licensee shall be liable for, and shall pay to the Superintendent
within 30 days, the actual travel and reasonable living expenses incurred on account of its
examination, supervision, and regulation, or shall pay a reasonable per diem rate approved by
the Superintendent.

(f) To carry out the purposes of this section, the Commissioner may do any of the
following:

(1) Retain attorneys, accountants, or other professionals and specialists as examiners,
auditors, or investigators to conduct or assist in the conduct of examinations or investiga-
tions;

(2) Enter into agreements or relationships with other government officials or regulatory
associations to improve efficiencies and reduce regulatory burdens by sharing resources,
standardized or uniform methods or procedures, and documents, records, information, or
evidence obtained under this section;

(3) Use, hire, contract, or employ public or privately available analytical systems,
methods, or software to examine or investigate the licensee or person subject to this
chapter;

(4) Accept and rely on examination or investigation reports made by other government
officials within or without the District of Columbia;

(5) Accept audit reports made by an independent certified public accountant for the
licensee, or person subject to this chapter, in the course of an examination covering the

181

§ 26-1112

BANKS AND OTHER FINANCIAL INSTITUTIONS

same general subject matter as the audit and may incorporate the audit report in the
report of the examination, report of investigation, or other writing of the Commissioner; or
(6) Assess the licensee, or person subject to this chapter, the cost of the services in
paragraph (1) of this subsection.

(g) This section shall remain in effect whether such licensee, or person subject to this
chapter, acts or claims to act under any licensing or registration law of the District of
Columbia, or claims to act without such authority.

(h) No licensee, or person subject to investigation or examination under this section, shall
knowingly withhold, abstract, remove, mutilate, destroy, or secrete any books, records,
computer records, or other information.

(i) All examination fees shall be prescribed by the Commissioner.

(Sept. 9, 1996, D.C. Law 11-155, § 13, 43 DCR 4213; July 18, 2009, D.C. Law 18-38, § 2(g), 56 DCR
4290.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 18-38 added subsecs. (f) to (i).
Temporary Amendments of Section

Section 2(g) of D.C. Law 17-350 added subsecs.
(f), (g), (h), and (i) to read as follows:

"(f) To carry out the purposes of this section,
the Commissioner may do any of the following:

"(1) Retain attorneys, accountants, or other pro-
fessionals and specialists as examiners, auditors, or
investigators to conduct or assist in the conduct of
examinations or investigations;

"(2) Enter into agreements or relationships with
other government officials or regulatory associa-
tions to improve efficiencies and reduce regulatory
burdens by sharing resources, standardized or uni-
form methods or procedures, and documents, rec-
ords, information, or evidence obtained under this
section;

"(3) Use, hire, contract, or employ public or
privately available analytical systems, methods, or
software to examine or investigate the licensee or
person subject to this act;

"(4) Accept and rely on examination or investi-
gation reports made by other government officials
within or without the District of Columbia;

"(5) Accept audit reports made by an indepen-
dent certified public accountant for the licensee, or
person subject to this act, in the course of an
examination covering the same general subject
matter as the audit and may incorporate the audit
report in the report of the examination, report of
investigation, or other writing of the Commission-
er;

"(6) Assess the licensee, or person subject to
this act, the cost of the services in paragraph (1) of
this subsection.".

"(g) This section shall remain in effect whether
such licensee, or person subject to this act, acts or
claims to act under any licensing or registration
law of the District of Columbia, or claims to act
without such authority.

"(h) No licensee, or person subject to investiga-
tion or examination under this section, shall know-
ingly withhold, abstract, remove, mutilate, destroy,
or secrete any books, records, computer records,
or other information.

"(i) All examination fees shall be prescribed by
the Commissioner."

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2(g) of Mortgage Lender and Broker Emer-
gency Amendment Act of 2008 (D.C. Act 17-617,
December 22, 2008, 56 DCR 189).

For temporary (90 day) amendment of section,
see § 2(g) of Mortgage Lender and Broker Con-
gressional Review Emergency Amendment Act of
2009 (D.C. Act 18-31, March 16, 2009, 56 DCR
2327).

Legislative History of Laws

For Law 18-38, see notes following § 26-1101.
Miscellaneous Notes

Section 3 of D.C. Law 18-38 provides:

"Sec. 3. Applicability.

"Except for section 2(c)(1), (g), (J), and (o), this
act shall not apply until the Commissioner of the
Department of Insurance, Securities, and Banking
has promulgated rules implementing this act."

§ 26-1113. Required loan disclosures.

(a)(1) A licensee who offers to make or procure a loan secured by a first or subordinate
mortgage or deed of trust on a single to 4-family home shall provide the borrower with a
financing agreement executed by the lender.
(2) The financing agreement shall provide:

(A) The term and principal amount of the loan;

182

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1113

(B) An explanation of the type of mortgage loan being offered;

(C) The rate of interest that will apply to the loan and, if the rate is subject to change,
or is a variable rate, or is subject to final determination at a future date based on some
objective standard, a specific statement of those facts;

(D) The points and all fees, if any, to be paid by the borrower or the seller, or both;
and

(E) The term during which the financing agreement remains in effect.

(3) If all the provisions of the financing agreement are not subject to future determina-
tion, change, or alteration, the financing agreement shall constitute a final binding
agreement between the parties as to the items covered by the financing agreement.

(a-l)(l) Within 3 business days of an application for a non-conventional mortgage loan, the
licensee shall provide to the borrower the written disclosures executed by the lender that are
required under this section.

(2) No non-conventional mortgage loan shall be consummated unless the borrower has
signed the disclosures required under this section and returned the disclosures to the
mortgage lender.

(3) The written disclosures required under this section shall be printed on a single page,
front and back, and include the following:

"Mortgage Disclosure Form

"(A) Borrower(s)

"(B) Property Address ..........

"(C) Lender

"(D) Lender Address

"(E) Lender Phone Number

"(F) Your loan is for $. , for a term of years. The final maturity

date is

"Your beginning interest rate is %. This rate is good for months/years

[circle one]. This rate and your payment can increase, starting on [date] , and may continue
to increase, depending on the terms of your mortgage.

"(G) Beginning on , you will be charged at the fully-indexed rate, which is

your margin ( %) plus an index value, which for you is Estimating

based on the current rate of the index, which is %, your monthly payment at

the fully -indexed rate would be $ While the index rate does vary, your

mortgage provides that the fully-indexed rate will not rise above %. At that

rate, your monthly payment would be $

"(H) YOU HAVE "INDICATED THAT YOUR GROSS MONTHLY INCOME IS

"(I) WARNING: Industry standards suggest that a homeowner should spend no more
than 28% of his or her gross monthly income on mortgage costs (including taxes and
insurance).

"(J) $ /month = Your principal + initial interest + taxes and insurance.

"(K) $ /month = Your principal + adjusted interest + taxes and insurance.

"(L) $ /month = Your principal + maximum interest + taxes and insur-
ance.

"(M) $ /month - 28% of your current gross monthly income (the recom-
mended limit).

"(N) Your gross monthly income may rise or fall over time, but if either of the first 3
amounts exceeds the fourth, you may want to reconsider the suitability of this loan for
your needs. You may cancel your mortgage application within 5 business days of
receiving this form.

"(0) Your mortgage carries a balloon payment. This means that on , you

will have to fully pay the remaining balance on the loan.

"(P) Your loan has a prepayment penalty. This means that if you pay off your

mortgage in the first years, you will have to pay a penalty of $ If

you refinance your mortgage in that period, you will be required to pay this amount.

183

§ 26-1113 BANKS AND OTHER FINANCIAL INSTITUTIONS

"(Q) See definitions of underlined terms on reverse side. DO NOT SIGN THIS IF
YOU DO NOT UNDERSTAND IT!

"Lender's Authorized Representative and date

"Borrower(s) and date.".

(4) The disclosures required under this section shall be in the following form:

BoiTOwer(s): Lender:

Property: Address:

Phone: ( )

Your loan is for $ , for a term of years. The final maturity date is

Your beginning interest rate is This rate is good for months/years

[circle one]. This rate and your payment can increase, starting on , and may

continue to increase, depending on the terms of your mortgage.

Beginning on [date] , you will be charged at the fully-indexed rate , which is your margin

( ) plus an index value, which for you is [index name] . Estimating based on

the current rate of the index, which is %, your monthly payment at the fully-
indexed rate would be $ While the index rate does vary, your mortgage

provides that the fully-indexed rate will not rise above At that rate, your

monthly payment would be $__

YOU HAVE INDICATED THAT YOUR GROSS MONTHLY INCOME IS $ _.

WARNING: Industry standards suggest that a homeowner should spend no
more than 28% of his or her gross monthly income on mortgage costs (including
taxes and insurance).

$ /month = Your beginning interest rate + property taxes and

insurance.

_7month = Your estimated fully-indexed rate (i.e. what you pay after

the beginning rate ends) + property taxes and insurance.

_7month = Your maximum possible interest rate + property taxes

and insurance.

mended limit).

./month = 28% of your current gross monthly income (the recom-

Your gross monthly income may rise or fall over time, but if any of the first three
amounts exceeds the fourth, you may want to reconsider the suitability of this
loan for your needs. You

□ Your mortgage carries a balloon payment. This means that on you will

have to fully pay the remaining balance on the loan.

□ Your loan has a prepayment penalty. This means that if you pay off your mortgage in

the first „__^_ years, you will have to pay a penalty of $ If you

refinance your mortgage in that period, you will be required to pay this amount.

184

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1113

See definitions of underlined terms on the reverse side.

DO NOT SIGN THIS IF YOU DO NOT UNDERSTAND IT!

Lender Date Borrower Date

Borrower Date

(5) The Commissioner may prescribe, by rule, a different form for the written disclo-
sures. The proposed rules shall be transmitted to the Council for a 60-day period of
review, excluding Saturdays, Sundays, legal holidays, and days of Council recess. If the
Council does not approve or disapprove the proposed rules by resolution within the 60-day
review period, the proposed rules shall be deemed approved.

(6) Certain definitions and explanations arising from the written disclosures required
under this section shall be printed on a single page, front and back, and include the
following:

"Beginning interest rate: means the interest rate the borrower pays at the beginning of
the loan. In many types of loans, this rate is good for only a few years and may increase
significantly.

"Fully indexed rate: is an indicator of what will happen to the interest rate on the loan and
the monthly payments. It is today's estimate of how high the interest rate on an adjustable
rate mortgage will go. It is calculated by taking a defined index rate and adding a certain
number of percentage points, called the margin. Since the index rate can go up or down, the
borrower cannot be sure what the future adjustable interest rate will be. Borrowers must
make sure they can afford the fully indexed interest rate and not just the initial interest rate.

"Maximum possible interest rate: means the highest your interest rate can go. Most loans
with adjustable rates have a defined maximum rate or lifetime cap. Borrowers need to think
about how likely it may be that the interest rate can go this high.

"Gross monthly income: means the borrower's gross, pre-tax income per month. Borrow-
ers should make sure the monthly household income amount shown on the form is correct.

"Monthly mortgage payment including taxes and insurance: means the amount the
borrower must pay every month for interest, repayment of loan principal, home insurance
premiums, and property taxes owed to the District of Columbia. Over time, in addition to
any possible increases in the loan's interest rate, the insurance premiums and property taxes
are likely to increase.

"Prepayment penalty: means any additional fee imposed by the mortgage lender on the
borrower if the borrower pays off the loan early. Borrowers must make sure they know
whether their loan has a prepayment penalty fee and how it works.

"Balloon payment: means that a large repayment of loan principal is due at the end of the
loan. This almost always means that the borrower has to get a new loan to make the balloon
payment.

"Payment option loan: means a mortgage loan that allows the borrower to pay less than
the interest being charged on the loan. The unpaid interest is added to the loan, so the loan
amount grows larger. Borrowers must make sure they know whether their loan is a payment
option loan and how it works.

"Points: means the fee, expressed as a percentage of the loan, a borrower pays to the
mortgage lender at closing, usually in exchange for a lower interest rate.

"Default: means a borrower has failed to make the payments due on the mortgage loan.
Once a borrower is in default on the loan, the mortgage lender can seek to foreclose on the
property.

"Foreclosure: means the legal process in which the mortgage lender can seize the
borrower's property if the borrower continually fails to make the payments due on the
mortgage loan.

185

§ 26-1113 BANKS AND OTHER FINANCIAL INSTITUTIONS

"Property tax: means the taxes owed to the District of Columbia as a result of the
borrower owning the property.

"Insurance: means property insurance that covers private homes and residences. It is
required by mortgage loans in order to protect the mortgage lender if the home is destroyed.

"Monthly condominium/co-operative/homeowner association fees: means the monthly fees
that must be paid by the borrower if the borrower's property is a condominium, co-operative,
or subject to a homeowner association. These fees usually are collected on a monthly basis.
Failure to pay these fees can result in a lawsuit against the borrower by the condominium, co-
operative, or homeowner association. As with property taxes and homeowners' insurance,
these fees are likely to increase over time."

(7) The Commissioner may prescribe, by rule, additional terms, definitions, and explana-
tions. The proposed rules shall be transmitted to the Council for a 60-day period of
review, excluding Saturdays, Sundays, legal holidays, and days of Council recess. If the
Council does not approve or disapprove the proposed rules by resolution within the 60-day
review period, the proposed rules shall be deemed approved.

(8) The information pursuant to this section shall be given to the borrower in a
prominent form, separate from other disclosures, in either electronic or physical form and:

(A) In a 12-point font;

(B) In plain English or in the language of the mortgage lender's presentation to the
borrower; and

(C) If given to the borrower on a physical piece of paper, shall be printed on a red
piece of paper measuring 8.5 inches by 11 inches.

(9) Within 5 business days of receiving the information pursuant to this section, the
borrower may cancel the application for a mortgage loan with no loss of any security
deposit or any other funds applied to guarantee an interest rate, not including reasonable
fees incurred to process the application. The borrower shall be notified of this right to
cancel at the time the information pursuant to this section is provided.

(b)(1) The financing agreement executed by the lender shall be delivered to the borrower
at least 72 hours before the time of settlement agreed to by the parties and shall include:

(A) The effective fixed interest rate or initial interest rate that will be applied to the
loan; and

(B) A restatement of all the remaining unchanged provisions of the financing agree-
ment.

(2) Prior to execution of the financing agreement, the borrower may waive in writing the
72-hour advance presentation requirement and accept the commitment at settlement only if
compliance with the 72-hour requirement is shown by the lender to be infeasible.

(3) A borrower aggrieved by any violation of this section shall be entitled to bring a civil
suit for damages, including reasonable attorney's fees, against the lender.

(Sept. 9, 1996, D.C. Law 11-155, § 14, 43 DCR 4213; Jan. 29, 2008, D.C. Law 17-90, § 2(b), 54 DCR
11925; July 18, 2009, D.C. Law 18-38, § 2(h), 56 DCR 4290.)

Historical and Statutory Notes

Effect of Amendments "(L) $ ./month = Your maximum pos-

D.C. Law 17-90 added subsec. (a-1). sible interest rate + taxes and insurance."
D.C. Law 18-38, in subsec. (a)(1), deleted "to be "(9) Within 5 business days of receiving from
occupied by the borrower" following "home"; in the mortgage lender the information pursuant to
subsec. (a-1), rewrote pars. (1), (3)(J) to (L), and this section, the borrower may cancel the applica-
(9), which had read as follows: tion for a mortgage loan with no loss of any
"(a-l)(l) Within 3 business days of an applica- security deposit or any other funds applied to
tion for a non-conventional mortgage loan, the guarantee an interest rate, not including reason-
mortgage lender shall provide to the borrower the able fees incurred to process the application. The
written disclosures required under this section." borrower shall be notified of this right to cancel at

U (J) $ /month = Your beginning in- the tinle the mortgage lender provides the infor-

terest rate + taxes and insurance. mation pursuant to this section."

"(K) $.'.' /month = Your estimated ful- Temporary Amendments of Section

ly-indexed rate (i.e., what you pay after the begin- Section 2(h) of D.C. Law 17-350, in subsec.

ning rate ends) + taxes and insurance. (a)(1), deleted "to be occupied bv the borrower";

186

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1114

and, in subsec. (a-1), rewrote pars. (1), (3)(J) Section 5(b) of D.C. Law 17-350 provides that

through (L), and (9), to read as follows: the act shall expire after 225 days of its having

"(a-l)(l) Within 3 business days of an applica- taken effect.

tion for a non-conventional mortgage loan, the Emergency Act Amendments

licensee shall provide to the borrower the written -, , /nn , , , , -

disclosures executed bv the lender that are re- F ° r „ ^ P T^ y } 90 d f } ^endment of section,

quired under this section." see * 2 A (h) of Mortgage Lender and Broker Emer-

„,,, * , „ . », . . , gency Amendment Act of 2008 (D.C. Act 17-617,

■ -,-■ -\ — -Vmonth = Your pnncipal + December 22, 2008, 56 DCR 189).

initial interest + taxes and insurance.

"(K) $ _7month = Your principal + F ? ^mporary (9 ° day) a ^ endm f n ^ °^ sec ^ on -

adjusted interest + taxes and insurance. see § 2 ^ of Mortgage Lender and Broker Con-

« /T x & f , , v "••'!, gressional Review Emergency Amendment Act of

(L) % ^month = Your pnncipal + \ DQ A ^ •

maximum interest + taxes and insurance. . 9197}

"(9) Within 5 business days of receiving the

information pursuant to this section, the borrower Legislative History of Laws
may cancel the application for a mortgage loan For Law 17-90, see notes following § 26-1101.

with no loss of any security deposit or any other For Law i 8 _ 3 8, see notes following § 26-1101.

funds applied to guarantee an interest rate, not

including reasonable fees incurred to process the Miscellaneous Notes

application. The borrower shall be notified of this Section 4 of D.C. Law 17-90 provides that sec-
right to cancel at the time the information pursu- tion 2 shall apply 30 days after the effective date of
ant to this section is provided." this act,

§ 26-1114. Prohibited practices.

(a) No mortgage broker, mortgage lender, mortgage loan originator, or loan officer
required to be licensed under this chapter, or person required to be licensed under this
chapter, shall:

(1) Obtain any agreement or instrument in which blanks are left to be filled in after
execution;

(2) Take an interest in collateral other than the real estate or residential property,
including fixtures and appliances thereon, securing a mortgage loan;

(3) Obtain any exclusive dealing or exclusive agency agreement from any borrower;

(4) Delay closing of any mortgage loan for the purpose of increasing interest, costs, fees,
or charges payable by the borrower;

(5) Obtain any agreement or instrument executed by a borrower which contains an
acceleration clause permitting the unpaid balance of a mortgage loan to be declared due for
any reason other than failure to make timely payments of interest and principal or to
perform other obligations undertaken in the agreement or instrument;

(6) Make, directly or indirectly, any mortgage loan with the intent to foreclose on the
borrower's property. For purposes of this paragraph, any of the following factors may be
considered in determining whether a mortgage loan was made with the intent to foreclose
on the borrower's property:

(A) Lack of the probability of full repayment of the loan by the borrower; and

(B) A significant proportion of similarly foreclosed loans by the lender;

(7) If acting as a mortgage lender, fail to require the person closing the mortgage loan to
provide to the borrower prior to the closing of the mortgage loan:

(A) A settlement statement as required pursuant to the Real Estate Settlement
Procedures Act, approved December 22, 1974 (88 Stat. 1724; 12 U.S.C. § 2601 et seq.),
and any regulations promulgated thereunder; and

(B) Any disclosure which is required by the Truth in Lending Act, approved May 29,
1968 (82 Stat. 146; 15 U.S.C. § 1601 et seq.), and Regulation Z (12.CFR Part 226);

(8) Except for an application fee in an amount not to exceed 1% of the original principal
amount of the mortgage loan applied for, and documented costs of credit reports and
appraisals, receive compensation from a borrower until a written commitment to make a
mortgage loan is given to the borrower by a mortgage lender which written commitment
shall be given not less than 72 hours prior to the closing of the mortgage loan, unless this
time period is waived by the borrower;

(9) Make predatory loans or engage in predatory lending activities in violation of
Chapter 11A of this title;

187

§ 26-1114 BANKS AND OTHER FINANCIAL INSTITUTIONS

(10) Purchase loans from an unlicensed mortgage broker or lender, unless the unlicensed
mortgage broker or lender is exempt under § 26-1102; or

(11) Engage in the business as a mortgage loan originator, mortgage lender, loan officer,
or mortgage broker, or hold himself out to the public to be a mortgage loan originator, loan
officer, mortgage lender, or mortgage broker, without a license under § 26-1104 or without
an exemption under § 26-1102.

(b) No mortgage broker required to be licensed under this chapter shall:

(1) Receive compensation from a mortgage lender of which he is a principal, partner,
trustee, director, member, officer, or employee;

(2) Receive compensation from a borrower in connection with any mortgage loan
transaction in which he is the lender or a principal, partner, trustee, director, member,
officer, or employee of the mortgage lender; or

(3) (A) Receive compensation for negotiating, placing, or finding a mortgage loan where a
mortgage broker, or any person affiliated with such mortgage broker, has otherwise acted
as a real estate broker, agent, or salesperson in connection with the sale of the real estate
which secures the mortgage loan and such mortgage broker or affiliated person has
received or will receive any other compensation or thing of value from the lender, borrower,
seller, or any other person, unless the borrower is given the following notice in writing at
the time the mortgage broker's sendees are first offered to the borrower:

DISCLOSURE OF DUAL CAPACITY

WE HAVE OFFERED TO ASSIST YOU IN OBTAINING A MORTGAGE LOAN. IF
WE ARE SUCCESSFUL IN OBTAINING A LOAN FOR YOU, WE WILL CHARGE

AND COLLECT FROM YOU A FEE NOT TO EXCEED % OF THE LOAN

AMOUNT. THIS FEE IS IN ADDITION TO ANY OTHER FEE WE MAY RECEIVE
IN CONNECTION WITH THE SALE OR PURCHASE OF THE REAL ESTATE THAT
WILL SECURE THE LOAN. WE DO NOT REPRESENT ALL OF THE LENDERS IN
THE MARKET AND THE LENDERS WE DO REPRESENT MAY NOT OFFER THE
LOWEST INTEREST RATES OR BEST TERMS AVAILABLE TO YOU. YOU ARE
FREE TO SEEK A LOAN WITHOUT OUR ASSISTANCE, IN WHICH EVENT YOU
WILL NOT BE REQUIRED TO PAY US A FEE FOR THAT SERVICE. THE
BORROWER ACKNOWLEDGES HAVING READ AND UNDERSTOOD THIS DISCLO-
SURE OF DUAL CAPACITY AND HAVING RECEIVED A COPY HEREOF.

BORROWER'S SIGNATURE DATE

BROKER'S SIGNATURE DATE

(B) The foregoing notice shall be at least 10-point type and the prospective borrower
shall acknowledge receipt of the written notice.

(C) The phrase "person affiliated with such mortgage broker" means any person which
is a subsidiary, stockholder, partner, trustee, director, member, officer, or employee of a
mortgage broker, and any corporation, 10% or more of the capital stock of which is
owned by a mortgage broker or by any person which is a subsidiary, stockholder,
partner, trustee, director, member, officer, or employee of a mortgage broker.

(c) Notwithstanding the provisions of subsection (b) of this section, no person shall act as a
mortgage broker in connection with any real estate sales transaction entered into prior to
September 9, 1996 in which such person, or any person affiliated with such person, has acted
as a real estate broker, agent, or salesperson and has received or will receive compensation in
connection with such transaction, unless such person was regularly engaged in acting as a
mortgage broker in connection with such transaction as of September 9, 1996.

(d) A licensee or any person required to be licensed under this chapter shall not:

(1) Directly or indirectly employ any scheme, device, or artifice to defraud or mislead
borrowers or lenders or to defraud any person;

(2) Engage in any unfair or deceptive practice toward any person;

188

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1114

(3) Obtain property by fraud or misrepresentation;

(4) Solicit or enter into a contract with a borrower that provides in substance that the
person or individual subject to this chapter may earn a fee or commission through "best
efforts" to obtain a loan even though no loan is actually obtained for the borrower;

(5) Solicit, advertise, or enter into a contract for specific interest rates, points, or other
financing terms unless the terms are actually available at the time of soliciting, advertising,
or contracting;

(6) Assist or aid or abet any person in the conduct of business under this chapter without
a valid license as required under this chapter;

(7) Fail to make disclosures as required by this chapter and any other applicable federal
or District law, including regulations thereunder;

(8) Fail to comply with this chapter or rules promulgated under this chapter, or fail to
comply with any other federal or District law, including the rules and regulations
thereunder, applicable to any business authorized or conducted under this chapter;

(9) Make, in any manner, any false or deceptive statement or representation, including
with regard to the rates, points, or other financing terms or conditions for a residential
mortgage loan, or engage in bait-and-switch advertising;

■ (10) Negligently make any false statement or knowingly and willfully make any omission
of material fact in connection with any information or reports filed with a governmental
agency or the NMLSR or in connection with any investigation conducted by the Commis-
sioner or another governmental agency;

(11) Make any payment, threat, or promise, directly or indirectly, to any person for the
purposes of influencing the independent judgment of the person in connection with a
residential mortgage loan, or make any payment, threat, or promise, directly or indirectly,
to any appraiser of a property for the purposes of influencing the independent judgment of
the appraiser with respect to the value of the property;

(12) Collect, charge, attempt to collect or charge, or use or propose any agreement
purporting to collect or charge any fee prohibited by this chapter;

(13) Cause or require a borrower to obtain property insurance coverage in an amount
that exceeds the replacement cost of the improvements as established by the property
insurer; or

(14) Fail to truthfully account for monies belonging to a party to a residential mortgage
loan transaction.

(Sept. 9, 1996, D.C. Law 11-155, § 15, 43 DCR 4213; May 7, 2002, D.C. Law 14-132, § 601(a)(3), 49 DCR
2551); July 18, 2009, D.C. Law 18-38, § 2(i), 56 DCR 4290.)

Historical and Statutory Notes

Effect of Amendments Temporary Amendments of Section

D.C. Law 14-132, in subsec. (a),substituted ", or Section 2(i) of D.C. Law 17-350, in subsec. (a),

person required to be licensed under this chapter, substituted "mortgage broker, mortgage lender,

shall;" for "shall"; made nonsubstantive changes in mortgage loan originator, or loan officer" for

subsecs. (a)(7) and (a)(8); and added subsecs. "mortgage broker or lender" in the lead-in text

(a)(9), (a)(10), and (a)(ll). and rewrote par. (11) to read as follows:

r\ n t ^ io oo • u ■ / \ 4. j.1. "(11) Engage in the business as a mortgage loan

D.C. Law 18-38, in subsec. (a), rewrote the . . , & & , , , . , „« & &

. , , , ! . , . 'v jiii originator, mortgage lender, loan officer, or mort-

mteoductory language and par (11); and added | e brok Qr ** d ^^ Qut tQ ^ bKc to be

subsec. (d). Prior to amendment, the introductory a mortgage loan orig i nat or, loan officer, mortgage

language and par. (11) of subsec. (a) read as lol- lendefj or mortgage broker> ^ thout a license un _

lows: der section 5 or without an exemption under sec-

"(a) No mortgage lender or mortgage broker tion 3."

required to be licensed under this chapter, or ; and added subsec. (d) to read as follows:

person required to be licensed under this chapter, «( d) A mortgage loan originator or loan officer

shall:" required to be licensed under this act shall not:

"(11) Engage in the business as a mortgage "(1) Directly or indirectly employ any scheme,

lender, mortgage broker, or hold himself or herself device, or artifice to defraud or mislead borrowers

out to the public to be a mortgage lender or or lenders or to defraud any person;

mortgage broker, without a license under "(2) Engage in any unfair or deceptive practice

§ 26-1104 or an exemption under § 26-1102." toward any person;

189

§ 26-1114

BANKS AND OTHER FINANCIAL INSTITUTIONS

"(3) Obtain property by fraud or misrepresenta-
tion;

"(4) Solicit or enter into a contract with a bor-
rower that provides in substance that the person
or individual subject to this act may earn a fee or
commission through "best efforts" to obtain a loan
even though no loan is actually obtained for the
borrower;

"(5) Solicit, advertise, or enter into a contract
for specific interest rates, points, or other financ-
ing terms unless the terms are actually available at
the time of soliciting, advertising, or contracting;

"(6) Assist or aid or abet any person in the
conduct of business under this act without a valid
license as required under this act;

"(7) Fail to make disclosures as required by this
act and any other applicable federal or District
law, including regulations thereunder;

"(8) Fail to comply with this act or rules pro-
mulgated under this act, or fail to comply with any
other federal or District law, including the rules
and regulations thereunder, applicable to any busi-
ness authorized or conducted under this act;

"(9) Make, in any manner, any false or deceptive
statement or representation, including with regard
to the rates, points, or other financing terms or
conditions for a residential mortgage loan, or en-
gage in bait and switch advertising;

"(10) Negligently make any false statement or
knowingly and willfully make any omission of ma-
terial fact in connection with any information or
reports filed with a governmental agency or the
NMLSR or in connection with any investigation
conducted by the Commissioner or another gov-
ernmental agency;

"(11) Make any payment, threat, or promise,
directly or indirectly, to any person for the pur-
poses of influencing the independent judgment of

the person in connection with a residential mort-
gage loan, or make any payment, threat, or prom-
ise, directly or indirectly, to any appraiser of a
property for the purposes of influencing the inde-
pendent judgment of the appraiser with respect to
the value of the property;

"(12) Collect, charge, attempt to collect or
charge, or use or propose any agreement purport-
ing to collect or charge any fee prohibited by this
act;

"(13) Cause or require a borrower to obtain
property insurance coverage in an amount that
exceeds the replacement cost of the improvements
as established by the property insurer; or

"(14) Fail to truthfully account for monies be-
longing to a party to a residential mortgage loan
transaction."

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 601(a)(3) of Home Loan Protection Emer-
gency Act of 2002 (D.C. Act 14-295, March 1, 2002,
49 DCR 2534).

For temporary (90 day) amendment of section,
see § 2(i) of Mortgage Lender and Broker Emer-
gency Amendment Act of 2008 (D.C. Act 17-617,
December 22, 2008, 56 DCR 189).

For temporary (90 day) amendment of section,
see § 2(i) of Mortgage Lender and Broker Con-
gressional Review Emergency Amendment Act of
2009 (D.C. Act 18-31, March 16, 2009, 56 DCR
2327).

Legislative History of Laws

For Law 14-132, see notes following § 26-603.
For Law 18-38, see notes following § 26-1101.

Notes of Decisions

Intent to foreclose 1

1. Intent to foreclose

Lender and mortgage broker did not violate
District of Columbia's Home Loan Protection Act
(HLPA) by extending loan with intent to foreclose,

even though they failed to verify adequately bor-
rower's ability to repay loan, given lender's expla-
nation that, in extending loans, he hoped, as real
estate agent, to obtain listing to sell borrowers'
homes, and given lack of existence of significant
proportion of similarly foreclosed loans by lender.
In re Dawson, 2008, 411 B.R. 1, subsequent deter-
mination 437 B.R. 15. Consumer Credit <>=> 4

§ 26-1116. Advertising.

No mortgage lender, mortgage broker, mortgage loan originator, or loan officer required to
be licensed under this chapter shall use, or cause to be published, any advertisement which:

(1) Contains any false, misleading, or deceptive statement or representation; or

(2) Identifies the mortgage lender, mortgage broker, mortgage loan originator, or loan
officer by any name other than the name set forth on the license issued by the Superinten-
dent,

(Sept. 9, 1996, D.C. Law 11-155,

17, 43 DCR 4213; July 18, 2009, D.C. Law 18-38, § 2(j), 56 DCR 4290.)
190

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1118

Historical and Statutory Notes

Effect of Amendments Emergency Act Amendments

D.C. Law 18-38, in the introductory language, For temporary (90 day) amendment of section,

substituted "mortgage lender, mortgage broker, see § 2(j) of Mortgage Lender and Broker Emer-

mortgage loan originator, or loan officer" for gency Amendment Act of 2008 (D.C. Act 17-617,

"mortgage lender or mortgage broker'; and, in December 22, 2008, 56 DCR 189).

par. (2), substituted "mortgage lender, mortgage For temporary (90 day) amendment of section,

broker, mortgage loan originator, or loan officer" see § 2(j) of Mortgage Lender and Broker Con-

for "lender or broker". gressional Review Emergency Amendment Act of

Temporal Amendments of Section 200MD.C. Act 18-81, March 16, 2009, 56 DCR

Section 2(j) of D.C. Law 17-350, in the lead-in " . ' . . f Laws

text, substituted "mortgage lender, mortgage bro- e ^ ls ** 1Ve io 1S . L J )ry ° , aW ^ „ . q ^ |, ni

ker, mortgage loan originator, or loan officer" for For Law 18 ^ 8 > see notes following § 26-1101.

"mortgage lender or mortgage broker"; and, in Miscellaneous Notes

par. (2), substituted "mortgage lender, mortgage Section 3 of D.C, Law 18-38 provides:

broker, mortgage loan originator, or loan officer" "Sec. 3. Applicability,

for "lender or broker". "Except for section 2(c)(1), (g), '(j), and (o), this

Section 5(b) of D.C. Law 17-350 provides that act shall not apply until the Commissioner of the

the act shall expire after 225 days of its having Department of Insurance, Securities, and Banking

taken effect. has promulgated rules implementing this act."

§ 26-1117. Evasive business tactics.

(a) If the Commissioner finds that the conduct of any other business conceals a violation or
evasion of this chapter, any rule or regulation adopted under this chapter, or any law
regulating mortgage loan lending in the District, the Commissioner may issue a written order
to a licensee or person required to be licensed under this chapter to:

(1) Stop doing business at any place in which the other business is conducted or solicited;
or

(2) Stop doing business in association or conjunction with the other business.

(b) A licensee or person required to be licensed under this chapter who violates an order of
the Commissioner issued under this section shall be subject to the penalties provided by
§ 26-1118.

(c) The Commissioner may request the Attorney General of the District of Columbia to
take appropriate action for the enforcement of an order issued under this section.

(Sept. 9, 1996, D.C Law 11-155, § 18, 43 DCR 4213; July 18, 2009, D.C. Law 18-38, § 2(k), 56 DCR
4290.)

Historical and Statutory Notes

Effect of Amendments (c), substituted 'Attorney General" for "Corpora-

D.C. Law 18-38 substituted "Commissioner" for tion Counsel".

"Superintendent"; in subsecs. (a) and (b), substi- r _ . , +• ¥T - + * T

tuted "licensee or person required to be licensed Le ^ sSatlve Hlsto ^ <> f Laws
under this chapter" for "licensee"; and, in subsec. For Law 18-38, see notes following § 26-1101.

§ 26-1118. Suspension, revocation, and enforcement.

(a) The Superintendent may suspend or revoke the license of any licensee if the licensee or
any owner, director, officer, member, partner, stockholder, employee, or agent of the licensee,
while acting on behalf of the licensee:

(1) Makes any material misstatement in an application for a license;

(2) Has been convicted of any crime of moral turpitude;

(3) In connection with any mortgage loan or loan application transaction:

(A) Commits any fraud;

(B) Engages in any illegal or dishonest activities; or

191

§26—1118 BANKS AND OTHER FINANCIAL INSTITUTIONS

(4) Violates any provision of this chapter, any rule or regulation adopted under it, or any
other law regulating mortgage loan lending in the District;

(5) Engages in a course of conduct consisting of the failure to perform written agree-
ments with borrowers;

(6) Fails to account for funds received or disbursed to the satisfaction of the person
supplying or receiving such funds;

(7) Fails to disburse funds in accordance with any agreement connected with, and
promptly upon closing of, a mortgage loan, taking into account any applicable right of
rescission;

(8) Is convicted of a felony or misdemeanor involving fraud, misrepresentation, or deceit;

(9) Has a judgment entered against such licensee involving fraud, misrepresentation, or
deceit;

(10) Has been found by a federal, state, or District agency to be in violation of any law or
any regulation applicable to the conduct of the licensee's business;

(11) Refuses to permit an investigation or examination by the Superintendent;

(12) Fails to pay any fee or assessment imposed by this chapter;

(12A) Has been found in violation of Chapter 11 A of this title or determined by the
Commissioner to have made a loan in violation of Chapter 11 A of this title;

(13) Fails to comply with any order of the Superintendent; or

(14) Otherwise demonstrates unworthiness, bad faith, dishonesty, or any other quality
that indicates that the business of the licensee has not been, or will not be, conducted
honestly, fairly, equitably, and efficiently.

(b)(1) The Commissioner may enforce the provisions of this section or any rules and
regulations adopted hereunder, by issuing an order against any licensee or person required to
be licensed. The Commissioner may issue an order requiring a licensee or any person
engaging in any activity or business within the scope of this chapter to show cause as to the
reasons enforcement action should not be taken against such licensee or person.

(2) If a violator fails to comply with an order issued under paragraph (1) of this
subsection, the Superintendent may impose a civil penalty of up to $25,000 for each
violation from which the violator failed to cease and desist or for which the violator failed to
take affirmative action to correct.

(c) The Superintendent may request the Corporation Counsel of the District of Columbia to
take appropriate action in the Superior Court of the District of Columbia for the enforcement
of an order issued under this section. The Corporation Counsel may also seek, and the
Superior Court of the District of Columbia may order or decree, damages and such other
relief allowed by law, including restitution. Persons entitled to any relief as authorized by
this section shall be identified by order of the court within 180 days after the date of the
order permanently enjoining the unlawful act or practice. In any action brought by the
Corporation Counsel by virtue of this provision, the Corporation Counsel shall be entitled to
seek attorney's fees and costs.

(d) In determining the amount of financial penalty to be imposed under subsection (b) of
this section, the Superintendent shall consider the following:

(1) The seriousness of the violation;

(2) The good faith of the violator;

(3) The violator's histoiy of previous violations;

(4) The deleterious effect of the violation on the public and mortgage industry;

(5) The assets of the violator; and

(6) Any other factors relevant to the determination of the financial penalty.

(e) Nothing in this chapter shall be construed to preclude any individual or entity who
suffers loss as a result of any violation of this chapter from maintaining an action to recover
damages or restitution and, as provided by statute, attorney's fees.

(Sept. 9, 1996. D.C. Law 11-155, § 19, 43 DCR 4213; May 7, 2002, D.C. Law 14-132, § 601(a)(4), 49 DCR
2551; July 18, 2009, D.C. Law 18-38, § 2(1), 56 DCR 4290.)

192

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-1119

Historical and
Effect of Amendments

D.C. Law 14-132 added subsec. (a)(12A); and, in
subsec. (b)(1), substituted "The Commissioner may
enforce the provisions of this section, or any rules
and regulations adopted hereunder, by issuing an
order against any licensee or person required to be
licensed." for "The Superintendent may enforce
the provisions of this section or any rules and
regulations adopted by issuing an order: (A) To
cease and desist from the violation and any further
similar violations; and (B) Requiring the violator
to take affirmative action to correct the violation
including the restitution of money or property to
any person aggrieved by the violation/'

D.C. Law 18-38, in subsec. (b)(1), added the
second sentence: and, in subsec. (b)(2), substituted
"$25,000" for "$1,000".

Temporary Amendments of Section

Section 2(k) of D.C. Law 17-350, in subsec.
(b)(2), substituted "$25,000" for "$1,000".

Statutory Notes

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 601(a)(4) of Home Loan Protection Emer-
gency Act of 2002 (D.C. Act 14-295, March 1, 2002,
49 DCR 2534).

For temporary (90 day) amendment of section,
see § 2(k) of Mortgage Lender and Broker Emer-
gency Amendment Act of 2008 (D.C. Act 17-617,
December 22, 2008, 56 DCR 189).

For temporary (90 day) amendment of section,
see § 2(k) of Mortgage Lender and Broker Con-
gressional Review Emergency Amendment Act of
2009 (D.C. Act 18-31, March 16, 2009, 56 DCR
2327).
Legislative Histoiy of Laws

For Law 14-132, see notes following § 26-603.

For Law 18-38, see notes following § 26-1101.

§ 26-1119. Hearing- procedures.

(a) A person to whom an order is issued pursuant to § 26-1117 or § 26-1118 shall be given
reasonable notice and the opportunity for a hearing as provided in this section. Upon the
issuance of any order, the Commissioner shall notify the respondent, applicant, licensee, or
person required to be licensed that the order has been entered and the reasons for the order.
The order shall include a statement that the respondent, applicant, licensee, or person
required to be licensed may submit a written request for a hearing within 20 days of receipt
of the order.

(b) The order under subsection (a) of this section shall be served by hand or by certified
mail, return receipt requested at the last known address of the person required to be licensed
or the last knowTi address maintained in the Department of Insurance and Securities and
Banking records for the applicant or licensee.

(c) If the person to wiiom an order has been issued fails to request a hearing within 20
days of receipt or delivery of the order, the person shall be deemed in default and the order
shall, on the 21st day, become permanent and remain in full force and effect until and unless
later modified or vacated by the Commissioner.

(Sept. 9, 1996, D.C. Law 11-155, § 20, 43 DCR 4213; May 7, 2002, D.C. Law 14-132, § 601(a)(5), 49 DCR
2551; July 18, 2009, D.C. Law 18-38, § 2(m), 56 DCR 4290.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 14-132, rewrote subsec. (a); and add-
ed subsec. (d). Subsec. (a) had read as follows:

"(a) Before the Superintendent takes any action
under § 26-1117 or § 26-1118, the Superintendent
shall give the licensee an opportunity for a hear-
ing."

D.C. Law 18-38 rewrote the section, which had
read as follows:

"(a) Except as provided in subsection (d) of this
section, the Commissioner shall give the licensee
an opportunity for a hearing before the Commis-
sioner takes any action under § 26-1117 and
§26-1118.

"(b) Notice of the hearing shall be given to the
licensee and the hearing shall be held in accor-

dance with the contested case provisions of sub-
chapter I of Chapter 5 of Title 2.

"(c) The hearing notice to the licensee shall be
sent by certified mail, return receipt requested, to
the principal place of business of the licensee at
least 30 days before the hearing.

"(d) If the Commissioner determines that an
emergency condition exists that may endanger the
public health or safety of the District due to non-
compliance with this chapter, the Commissioner
may issue a temporary cease and desist order to
require a licensee, or a person required to have a
license, to cease operations immediately; provided,
that the duration of a temporary cease and desist
order issued under this subsection shall not exceed
30 days and the order includes notice of a hearing

193

§ 26-1119 BANKS AND OTHER FINANCIAL INSTITUTIONS

to be held within 30 days of the order to be held Emergency Act Amendments

pursuant to subsection (b) and (c) of this section. For temporary (90 day) amendment of section,

Any person subject to a cease and desist order see § 601(a)(5) of Home Loan Protection Emer-
may appeal the order within 15 days, but shall be gency AcUrf 2002 (D.C. Act 14-295, March 1, 2002,
required to comply with the order pending appeal." 49 ~^ -°34).

Legislative History of Laws

For Law 14-132, see notes following § 26-603.

For Law 18-38, see notes following § 26-1101.

§ 26-1120. Limitation on name of mortgage business.

A mortgage lender, mortgage broker, mortgage loan originator, or loan officer may not do
business under any trade name that misrepresents or tends to misrepresent that the
mortgage lender is:

(1) A bank, trust company, or savings bank;

(2) A savings and loan association;

(3) A credit union; or

(4) An insurance company.

(Sept. 9, 1996, D.C. Law 11-155, § 21, 43 DCR 4213; July 18, 2009, D.C. Law 18-38, § 2(n), 56 DCR
4290.)

Historical and Statutory Notes

Effect of Amendments Emergency Act Amendments

D.C. Law 18-38 substituted "mortgage lender, For temporary (90 day) amendment of section,

mortgage broker, mortgage loan originator, or loan see § 2(1) of Mortgage Lender and Broker Emer-

officer" for "mortgage lender or mortgage broker". gency Amendment Act of 2008 (D.C. Act 17-617,

Temporary Amendments of Section December 22, 2008, 56 DCR 189).

Section 2(1) of D.C. Law 17-350 substituted For temporary (90 day) amendment of section,
"mortgage lender, mortgage broker, mortgage see § 2(1) of Mortgage Lender and Broker Con-
loan originator, or loan officer" for "mortgage gressional Review Emergency Amendment Act of
lender or mortgage broker". 2009 (D.C. Act 18-31, March 16, 2009, 56 DCR

Section 5(b) of D.C. Law 17-350 provides that 2327) -
the act shall expire after 225 days of its having Legislative History of Laws

taken effect. For Law 18-38, see notes following § 26-1101.

§ 26-1120.01. Confidential information.

(a) To assist in the performance of the Commissioner's duties under this chapter, the
Commissioner may:

(1) Share documents, materials, or other information, including confidential and privi-
leged documents, materials, or information subject to this chapter, with other local, state,
federal, and international regulatory agencies, with the Conference of State Bank Supervi-
sors, SRR, NMLSR, their affiliates, or subsidiaries, or with state, federal, and international
law enforcement authorities; provided, that the recipient agrees to maintain the confiden-
tiality and privileged status of the document, material, or other information;

(2) Receive documents, materials, or information, including confidential and privileged
documents, materials, or other information, from the Conference of State Bank Supervi-
sors, SRR, NMLSR, their affiliates, or subsidiaries, or from regulatory and law enforce-
ment officials of foreign or other domestic jurisdictions, and shall maintain as confidential
or privileged any document, material, or information received with notice or the under-
standing that it is confidential or privileged under the laws of the jurisdiction that is the
source of the document, material, or information;

(3) Enter into agreements with the entities set forth in paragraph (1) of this subsection
governing sharing and use of information consistent with this chapter;

(4) Authorize a national criminal background check and submission of fingerprints and
other identifying information, submitted through the NMLSR, and other information with,
and receive criminal history record information from, the NMLSR, the Metropolitan Police
Department, and the Federal Bureau of Investigation for the purposes of facilitating
determinations regarding eligibility for licensure under this chapter; or

194

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1121

(5) Contract with a third party, including the SRR, the Conference of State Bank
Supervisors, or its affiliates or subsidiaries, to perform any functions; including the
collection of licensing and processing fees, collection of contact information and other
identifying information, fingerprints, written consent to a criminal background check,
personal history and experience, and conduct of examinations related to mortgage loan
originator, loan officer, mortgage lender, or mortgage broker activities, that the Commis-
sioner may consider appropriate.
(Sept, 9, 1996, D.C. Law 11-155, § 21a, as added July 18, 2009, D.C. Law 18-38, § 2(o), 56 DCR 4290.)

Historical and Statutory Notes
Legislative History of Laws "Sec. 3. Applicability.

For Law 18-38, see notes following § 26-1101. "Except for section 2(c)(1), (g), (j), and (o), this

■ivf n xr f ac ^ sna U n °t apply until the Commissioner of the

Miscellaneous JNotes Department of Insurance, Securities, and Banking

Section 3 of D.C. Law 18-38 provides: has promulgated rules implementing this act."

§ 26-1120.02. Nationwide Mortgage Licensing System and Registry reporting
requirements.

(a) The Commissioner shall regularly report violations of this chapter, as well as enforce-
ment actions and other relevant information, to the NMLSR. The reports shall be subject to
the provisions of § 26-1120.01.

(b) Each licensee shall submit to the NMLSR reports of condition, which shall be in such
form and shall contain such information as the NMLSR may require.

(Sept, 9, 1996, D.C. Law 11-155, § 21b, as added July 18, 2009, D.C. Law 18-38, § 2(o), 56 DCR 4290.)

Historical and Statutory Notes
Legislative History of Laws "Sec. 3. Applicability.

For Law 18-38, see notes following § 26-1101. "Except for section 2(c)(1), (g), (j), and (o), this

tvi ■ ii ivr * act sna ^ not a PPly untn the Commissioner of the

Miscellaneous iNotes Department of Insurance, Securities, and Banking

Section 3 of D.C. Law 18-38 provides: has promulgated rules implementing this act."

§ 26-1120.03. Nationwide Mortgage Licensing System and Registry informa-
tion challenge process.

The Commissioner shall establish a process whereby licensees may challenge information
entered into the NMLSR by the Commissioner.
(Sept. 9, 1996, D.C. Law 11-155, § 21c, as added July 18, 2009, D.C. Law 18-38, § 2(o), 56 DCR 4290.)

Historical and Statutory Notes

Legislative History of Laws "Sec. 3. Applicability.

For Law 18-38, see notes following § 26-1101. "Except for section 2(c)(1), (g), CD, and (o), this

act shall not apply until the Commissioner of the
Miscellaneous JNotes Department of Insurance, Securities, and Banking

Section 3 of D.C. Law 18-38 provides: has promulgated rules implementing this act."

§ 26-1121. Authority of Superintendent to issue rules and regulations.

Historical and Statutory Notes

Temporary Addition of Section "(1) Share documents, materials, or other infor-

Section 2(m) of D.C. Law 17-350 added sections nation, including confidential and privileged docu-

to read as follows: ments, materials, or information subject to this act,

... _. «. . . . . _ . with other local, state, federal, and international

Sec. 22a. Confidential information. regulatory agencies, with the Conference of State

"(a) To assist in the performance of the Com- Bank Supervisors, SRR, NMLSR, their affiliates,

missioner's duties under this act, the Commission- or subsidiaries, or with state, federal, and interna-

er may: tional law enforcement authorities; provided, that

195

§ 26-1121

BANKS AND OTHER FINANCIAL INSTITUTIONS

the recipient agrees to maintain the confidentiality
and privileged status of the document, material, or
other information;

"(2) Receive documents, materials, or informa-
tion, including confidential and privileged docu-
ments, materials, or other information, from the
Conference of State Bank Supervisors, SRR,
NMLSR, their affiliates, or subsidiaries, or from
regulatory and law enforcement officials of foreign
or other domestic jurisdictions, and shall maintain
as confidential or privileged any document, materi-
al, or information received with notice or the un-
derstanding that it is confidential or privileged
under the laws of the jurisdiction that is the source
of the document, material, or information;

"(3) Enter into agreements with the entities set
forth in paragraph (1) of this subsection governing
sharing and use of information consistent with the
act; or

"(4) Authorize a national criminal background
check and submission of fingerprints and other
identifying information, submitted through the
NMLSR, and other information with, and receive
criminal history record information from, the
NMLSR, the Metropolitan Police Department, and
the Federal Bureau of Investigation for the pur-
poses of facilitating determinations regarding eligi-
bility for licensure under this act.

"Sec. 22b. Nationwide Mortgage Licensing
System and Registry reporting requirements.

"(a) The Commissioner shall regularly report
violations of this act, as well as enforcement ac-
tions and other relevant information, to the
NMLSR. The reports shall be subject to the
provisions of section 22a.

"(b) Each licensee shall submit to the NMLSR
reports of condition, which shall be in such form

and shall contain such information as the NMLSR
may require.

"Sec. 22c. Nationwide Mortgage Licensing Sys-
tem and Registry information challenge process.

"The Commissioner shall establish a process
whereby licensees may challenge information en-
tered into the NMLSR by the Commissioner."

Section 3 of D.C. Law 17-350 added a provision
to read as follows:

"Sec. 3. Applicability.

"Except for section 2(c)(1), (g), (j), and (1), this
act shall not apply until the Commissioner of the
Department of Insurance, Securities, and Banking
('Commissioner') has promulgated rules imple-
menting this act. The mortgage loan originator
requirements shall not apply until such time as the
District of Columbia, through the Commissioner,
has become a part of the Nationwide Mortgage
Licensing System and Registry ('NMLSR') and
the NMLSR is operational to receive and process
applications for licensing of District of Columbia
loan originators or by December 31, 2009, whichev-
er is later."

Section 5(b) of D.C. Law 17-350 provides that
the act shall expire after 225 days of its having
taken effect.

Emergency Act Amendments

For temporary (90 day) additions, see §§ 2(m), 3
of Mortgage Lender and Broker Emergency
Amendment Act of 2008 (D.C. Act 17-617, Decem-
ber 22, 2008, 56 DCR 189).

For temporary (90 day) additions, see §§ 2(m), 3
of Mortgage Lender and Broker Congressional
Review Emergency Amendment Act of 2009 (DC.
Act 18-31, March 16, 2009, 56 DCR 2327).

Chapter 11A
Home Loan Protection.

Subchapter I. Definitions; Federally Reg-
ulated and Supervised Entities and
Fannie Mae and Freddie Mac.

Section

26-1151.01.
26-1151.02.

Definitions.

Federally regulated, supervised, and
insured entities and the Federal
National Mortgage Association and
Federal Home Loan Corporation.

Subchapter II. Prohibited Practices.

26-1152.01. Applicability.

26-1152.02. Insufficient repayment ability.

26-1152.03. Restrictions on the financing of sin-
gle-premium credit insurance.

26-1152.04. Restriction on financing origina-
tion/discount points and fees.

26-1152.05. No encouragement of default.

Section

26-1152.06.

26-1152.08.
26-1152.09.

26-1152.10.
26-1152,11.

26-1152.12.
26-1152.13.
26-1152.14.
26-1152.15.
26-1152.16.
26-1152.17.
26-1152.18.

26-1152.19.
26-1152.20.
26-1152.21.
26-1152.22.
26-1152.23.

Unfair steering or improper use of
credit scores.

Home improvement contracts.

No increase in interest rate upon
default.

Charges in bad faith.

Failure to timely send disclosure no-
tice.

Prepayment premium, fee or charge.

Limitations on balloon payments.

No call provision.

No negative amortization.

No advance payments.

No advance waivers.

No oppressive mandatory arbitration
clause.

Homeownership counseling.

Broker licensor.

Filing requirements.

Suspect settlement service providers.

Median family income.

196

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1151.01

Section Section

Subchapter III. Violations and Remedies; 26-1153.05. Assignee liability.

Enforcement and Civil Liability. ^ , . , ,,r ™ ,

Subchapter IV. Rulemaking.

26-1153.01. Violations and remedies. 26-1154.01. Rulemaking authority.

26-1153.02. Enforcement.

26-1153.03. Administrative penalties. Subchapter V. Applicability.

26-1153.04. Final decision. 26-1155.01. Applicability.

Subchapter I. Definitions; Federally Regulated and Supervised

Entities and Fannie Mae and Freddie Mac.

§ 26-1151.01. Definitions.

For the purposes of this chapter, the term:

(1) "Annual percentage rate" means the annual percentage rate for the mortgage loan
calculated according to the provisions of the Truth in Lending Act, the regulations
promulgated thereunder by the Board of Governors of the Federal Reserve System, and
the official staff commentary thereto.

(2) "Assessed value" means the full market value of real property for assessment and
taxation purposes as determined by the Office of Tax and Revenue and in effect on the
applicable date.

(3) "Bona fide loan discount points" means loan discount points which are knowingly paid
by the borrower for the express purpose of reducing, and which reduce, the annual
percentage rate.

(4) "Borrower" means each accommodation party, borrower, co-borrower, cosigner, co-
maker, obligor, mortgagor, or guarantor obligated to repay a loan that is secured by a lien
instrument.

(5) "Bridge loan" means a loan that has a term of less than one year and that only
requires that payments of interest be made until the entire unpaid balance becomes due.

(6) "Commissioner" shall have the same meaning as set forth in § 26-551.02(7).

(7)(A) "Covered loan" means a mortgage loan, secured by property located in the
District (including an open-end line of credit, but not including a mortgage loan insured or
guaranteed by a state or local authority, the District of Columbia Housing Finance Agency,
the Federal Housing Administration, or the Department of Veteran Affairs, or a reverse
mortgage transaction), in which the terms of the mortgage loan exceed one or more of the
following thresholds:

(i) The loan is secured by a first mortgage on the borrower's principal dwelling and
the annual percentage rate at closing will exceed by more than 6 percentage points the
yield on United States Treasury securities having comparable periods of maturity to
the loan maturity measured as of the 15th day of the month immediately preceding the
month in which the application for the residential mortgage loan is received by the
creditor;

(ii) The loan is secured by a junior mortgage on the borrower's principal dwelling
and the annual percentage rate at closing will exceed by more than 7 percentage points
the yield on United States Treasury securities having comparable periods of maturity
to the loan maturity measured as of the 15th day of the month immediately preceding
the month in which the application for the residential mortgage loan is received by the
creditor; or

(iii) The origination/discount points and fees payable by the borrower at or before
loan closing exceed 5% of the total loan amount.

(B) Notwithstanding subparagraph (A) of this paragraph, in the case of a loan made or
purchased by the Federal National Mortgage Association, Federal Home Loan Corpora-
tion, or a bank, trust company, savings and loan association, or savings bank that is
regulated and supervised by a supervising federal agency, which entities shall include the
finance and operating subsidiaries of such entities that are so regulated and supervised,
the term "covered loan" shall have the same meaning as a mortgage in section 103(aa) of

197

§ 26-1151.01 BANKS AND OTHER FINANCIAL INSTITUTIONS

the Truth in Lending Act, and regulations adopted pursuant thereto by the Federal
Reserve Board, including 12 C.F.R. § 226.32 (relating to requirements for certain closed-
end home mortgages).

(8) "Department" shall have the same meaning as set forth in § 26-551.02(9).

(9) "District" means the District of Columbia.

(10) "Gross income" means a borrower's gross income as set forth in a mortgage loan
application and by a borrower, the borrower's financial statement, a credit report, financial
information provided to the lender on behalf of the borrower, or as determined by any
other reasonable means available to a lender, including a signed statement of the borrower;
provided, that the borrower certifies the accuracy of the statement of his or her income and
provides documentation that evidences such gross income.

(11) "Lender" means any person to whom the obligation is initially payable, either under
the terms of the note or contract, or by agreement if there is no note or contract. The
term "lender" shall include a mortgage broker, obligee, or mortgagee.

(12) "Lien instrument" means a deed of trust; mortgage; security agreement; trust
deed; land installment contract; contract for a deed; assignment of lease, rent, or profit;
or any other conveyance or retention of an interest in real property or personal property
related to real property, including cooperative housing units and garage spaces, which
secures the performance of a note or other obligation and creates a lien on real property or
security interest in personal property. The term "lien instrument" shall include an
amendment, modification, supplement, replacement, or restatement of a lien instrument.

(13) "Mortgage broker" shall have the same meaning as in § 26-1101(10).
(14)(A) "Mortgage loan" means any loan or other extension of credit:

(i) To a natural person primarily for personal, family, or household purposes;

(ii) That is secured by a lien instrument secured, in whole or in part, by residential
real property located within the District which there is located, or there is to be
located, a structure, intended principally for occupancy of from one to 4 families, and
which is, or will be, occupied by the borrower as the borrower's principal dwelling; and

(hi) For which the principal amount does not exceed the conforming loan size limit

for a comparable dwelling as established and revised from time to time by the Federal

National Mortgage Association or the Federal Home Loan Corporation.

(B) A mortgage loan shall not include an extension of credit for the purpose of

financing the acquisition or initial construction of a borrower's residential real property.

(15) "Note" means a promissory note secured by a deed of trust, a promissory note or
mortgage bond secured by a mortgage, or any other written evidence of indebtedness or
obligation secured by a lien instrument.

(16) "Notice" means a written notice that describes with reasonable clarity the specific
act, event, or default and the response that the notice sender is seeking from the addressee
or other party obligated to the sender of the notice.

(17) "Origination/discount points and fees" means points and fees as defined in 12 C.F.R.
§ 226.32(b).

(18) "Person" means an individual, corporation, governmental subdivision or agency,
business trust, estate, trustee for a trust, partnership, association, limited liability company,
joint venture, government, or any other legal or commercial entity or agent.

(19) "Point" means, when referring to a fee, one percent applied to a portion of a loan
amount.

(20) "Principal balance" means the principal amount of a note.

(21) "Real property" means real property in the District and interests in real property
located in the District, including the stock of a cooperative housing corporation and
associated residential lease of a cooperative housing unit or garage space.

(22) "Red Flag Warning Disclosure Notice" means the notice provided for by
§ 26-1152.11.

(23) "Residential real property" means real property in the District improved by:

(A) A one to 4 family dwelling, including a condominium or cooperative housing unit;
or

(B) A mixed-use building with an assessed value of $1 million or less containing one to
4 family dwelling units where:

198

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1151,01

Note 1

(i) The owner of the residential real property is one or more natural persons who
occupy one of the dwelling units as the owner's principal dwelling; or

(ii) The borrower is one or more natural persons who intend, in good faith, to occupy
one of the dwelling units as the borrower's principal dwelling at the time of the loan
closing.

(24) "Servicer" shall have the same meaning as in section 6(i)(2) of the Real Estate
Settlement Procedures Act of 1974, approved November 28, 1990 (104 Stat. 4405; 12 U.S.C.
§ 2605(i)(2)).

(25) "Subsidiary", with respect to a specified bank holding company, means a company:

(A) Twenty-five percent or more of whose voting shares (excluding shares owned by
the United States or by any company wholly owned by the United States) is directly or
indirectly owned or controlled by the bank holding company, or is held by it with power
to vote;

(B) The election of a majority of whose directors is controlled in any manner by the
bank holding company; or

(C) With respect to the management or policies of which the bank holding company
has the power, directly or indirectly, to exercise a controlling influence, as determined by
the Board of Governors of the Federal Reserve System, after notice and opportunity for
hearing.

(26) "Supervising federal agency" means the Office of the Comptroller of the Currency,
the Office of Thrift Supervision, the Federal Reserve Board, or the Federal Deposit
Insurance Corporation.

(27) "Truth in Lending Act" means the Truth in Lending Act, approved May 29, 1968 (82
Stat. 146; 15 U.S.C. § 1601 et seq.).

(May 7, 2002, D.C. Law 14-132, § 101, 49 DCR 2551; June 11, 2004, D.C. Law 15-166, § 4(d), 51 DCR
2817.)

Historical and Statutory Notes

Effect of Amendments on Consumer and Regulatory Affairs. The Bill

D.C. Law 15-166 rewrote pars. (6) and (8) which was adopted on first and second readings on Feb-

had read as follows: ruary 5, 2002, and February 19, 2002, respectively.

"(6) 'Commissioner' means the Commissioner of Signed by the Mayor on March 1, 2002, it was

the Department of Banking* and Financial Institu- assigned Act No. 14-296 and transmitted to both

tions, or his or her authorized designee." Houses of Congress for its review. D.C. Law

"(8) 'Department' means the Department of 14 - 132 became effective on May 7, 2002.

Banking and Financial Institutions." For Law 15-166, see notes following

Emergency Act Amendments § 26-131.02.

For temporary (90 day) addition of section, see References in Text

Ll!9\ur°T, L T^r°t Cti0 l ^onlfYo^PP Th * "Truth in Lending Act", referred to in par.

2002 (D.C. Act 14-295, March 1, 2002, 49 DCR m . , ., , , ■ lt - s TT « r ' A < 1fift1 of '

2534).

(1), is classified to 15 U.S.C.A. § 1601 et seq.

For temporary (90 day) amendment of section, Section 103(aa) of the Truth and Lending Act ,

see § 4(d) of Consolidation of Financial Services referred to in par. (7)(B), is classified to 15

Emergency Amendment Act of 2004 (D.C. Act U -S.C.A. § 1602(aa).

15-381, February 27, 2004, 51 DCR 2653). Delegation of Authority

Legislative History of Laws Delegation of Authority Pursuant to D.C. Law

Law 14-132, the "Home Loan Protection Act of 14-132, "The Home Loan Protection Act of 2002",

2002", was introduced in Council and assigned Bill see Mayor's Order 2002-154, September 13, 2002

No. 14-515, which was referred to the Committee (49 DCR 8622).

Notes of Decisions

Covered loan 1 ceeded yield on United States Treasury securities,

Mortgage broker 2 having comparable rates of maturity, by more than

six percentage points. Richards v. Option One

Mortg. Corp., 2010, 682 F.Supp.2d 40, affirmed 403

1. Covered loan Fed.Appx. 523, 2010 WL 5139417. Mortgages <§=>

Borrower's residential mortgage was not "cov- 211

ered loan" under District of Columbia law, absent Mortgagor's refinancing loan amount of $427,500

evidence that annual percentage rate on loan ex- exceeded conforming loan size limit necessary to

199

§ 26-1151.01 BANKS AND OTHER FINANCIAL INSTITUTIONS

Note 1

be covered under District of Columbia Home Loan efforts to secure mortgage loan and attorney who
Protection Act (HLPA); at time of loan, Federal was one of company's principals acted on compa-
National Mortgage Association had set $417,000 as ny's behalf in negotiating loan, precluding sum-
limit. Palmer v. GMAC Commercial Mortg., 2009, mary judgment for either borrower or company on
628 F.Supp.2d 186. Consumer Credit ©=> 33.1 issue of whether company acted as statutory mort-
2. Mortgage broker g a g e broker, as defined under District of Columbia
'Material issues of fact existed as to whether law > for purposes of borrower's claim under Dis-
settlement company acted solely as settlement tri ct of Columbia Home Loan Protection Act
agent with respect' to borrower's mortgage loan (HLPA). Sloan ex rel. Juergens v. Urban Title
and had no involvement in soliciting loan, or Sei-vices, Inc., 2009, 652 F.Supp.2d 40. Federal
whether company was main driving force behind Civil Procedure ©» 2491.8

§ 26-1151.02. Federally regulated, supervised, and insured entities and the

Federal National Mortgage Association and Federal Home
Loan Corporation.

(a) Nothing in subchapter II of this chapter shall be construed to apply to loans made or
purchased by the Federal National Mortgage Association, Federal Home Loan Corporation,
or a bank, trust company, savings and loan association, or savings bank, that is regulated and
supervised by a supervising federal agency, including the finance and operating subsidiaries
of such entities that are so regulated and supervised.

(b) This section shall not apply to any lender that is not federally regulated and supervised,
except the Federal National Mortgage Association, or the Federal Home Loan Corporation.

(c) Except as provided in subsection (d) of this section, the Home Ownership and Equity
Protection Act of 1994, approved September 23, 1994 (108 Stat. 2190; codified in various
sections of Chapter 16 of the U.S. Code), and the implementing regulations issued by the
Federal Reserve Board, as each may be amended from time to time, are hereby adopted by
reference thereto and shall apply to loans made or purchased by the Federal National
Mortgage Association, Federal Home Loan Corporation, or a bank, trust company, savings
and loan association, or savings bank that is regulated and supervised by a supervising
federal agency, including the finance and operating subsidiaries of such entities that are so
regulated and supervised, that engage in lending activities in the District.

(d) The violations, remedies, penalties, and enforcement provisions set forth in subchapter
III of this chapter shall apply to loans made or purchased by the Federal National Mortgage
Association, Federal Home Loan Corporation, or a bank, trust company, savings and loan
association, or savings bank that is regulated and supervised by a supervising federal agency,
including the finance and operating subsidiaries of such entities that are so regulated and
supervised, that engage in lending activities in the District with regard to violations of this
chapter.

(May 7, 2002, D.C. Law 14-132, § 102, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments References in Text

For temporary (90 day) addition of section, see The "Home Ownership and Equity Protection

tfrn^T^oo 1 ^ !! ? m Sf C ^ A r^°J A ^ of 1994", referred to in subsec. (c), is Pub.L.

2534) ' 103 " 325 ' ™ e J ' Subtitle B ' Se P L 23 ' 1994 < 108

T ( ~ ' , . „. A _ T Stat. 2190, which is codified to various sections in

Legislative Histatyrf Laws Chapter 16 of Title 15 of U.S.C.A.

For Law 14-132, see notes following
§ 26-1151.01.

Notes of Decisions

Dismissal 1 indirectly liable under the District of Columbia

Mortgage Lender and Broker Act or the District

of Columbia Home Loan Protection Act based on

1. Dismissal liability for civil conspiracy in home purchasers'

Investment and loan company involved in alleg- action, where civil conspiracy claims had already

edly fraudulent home loan transaction, upon which been dismissed. Blue v. Fremont Inv. & Loan,

200

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1152,02

Subchapter II. Prohibited Practices.

§ 26-1152.01. Applicability.

This subchapter shall only apply to a covered loan as defined in § 26-1151.01(7)(A).
(May 7, 2002, D.C. Law 14-132, § 201, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 201 of Home Loan Protection Emergency Act of § 2fi-ll r >1 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR
2534).

§ 26-1152.02. Insufficient repayment ability.

(a) A lender shall not make a covered loan if the borrower, at the time that the covered
loan is closed, cannot reasonably be expected to make the scheduled payments. For purposes
of making this determination:

(1) The lender's consideration shall include the ability to make any payments for
mortgage insurance premiums, escrow deposits, or direct payment of real estate taxes and
property insurance premiums (in addition to the payments of interest and principal) and
the employment status of the borrower. The lender may consider the current and
expected income, current obligations, and other financial resources of the borrower (other
than the borrower's equity in the dwelling which secures repayment of the loan).

(2) The lender shall not consider the borrowers' equity interest in the residential real
property which secures repayment of the covered loan; provided, that the borrower's
equity interest in the residential real property which secures repayment of the covered loan
may be considered by the lender in determining whether to approve the loan as part of the
evaluation of the borrower's likelihood of default.

(3) In the case of a covered loan which includes payment terms under which the
aggregate amount of the scheduled payments will not fully amortize the outstanding
principal balance, the lender's determination of the ability of the borrowers to make an
expected balloon payment at the scheduled maturity date may include consideration of the
borrowers' equity interest in the residential real property and the borrowers' ability, based
on current market conditions, to refinance the covered loan without penalty, hardship, or
material loss of equity.

(4) A lender shall not include or add a borrower to the covered loan who did not own or
reside in the residential real property securing the covered loan prior to the covered loan
transaction for the purpose of increasing the income and ability of the borrowers owning or
residing in the residential real property to make all the scheduled payments of interest,
principal, and mortgage insurance premiums, and escrow deposits for, or direct payment of,
real estate taxes and property insurance premiums, unless the included or added borrower
separately confirms in writing to the lender that the borrower expects and commits to
make or substantially contribute to:

(A) The scheduled payments on the covered loan; and

(B) Escrow deposits for or direct payment of real estate taxes and property insurance
premiums.

(b) The requirements of subsection (a) of this section shall only apply to borrowers whose
gross income, as reported on the loan application which the lender relied upon in making the
credit decision, does not exceed 120% of median family income. For purposes of this
subsection, the median family income shall be the most recent estimate made by the U.S.
Department of Housing and Urban Development at the time the application is received. For
purposes of determining gross income under this section, only the income of the borrower
shall be considered.

(c) The current and expected income, current debts, current assets, and employment of the
borrowers shall be verified by the lender in accordance with standard residential mortgage
lending industry practices to underwrite a loan secured by a residential lien instrument. For

201

§ 26-1152.02

BANKS AND OTHER FINANCIAL INSTITUTIONS

the purposes of this subsection, the lender shall be deemed to have followed standard
residential mortgage lending industry practices if the lender verified the borrowers' current
and expected income and current debts in accordance with the verification guidelines and
practices of the Federal National Mortgage Association, Federal Home Loan Corporation,
U.S. Department of Housing and Urban Development, or U.S. Department of Veterans
Affairs. Nothing in this subsection shall preclude the utilization of other standard industry
verification practices accepted by applicable regulatory authorities.
(May 7, 2002, D.C. Law 14-132, § 202, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative Histoiy of Laws

For temporary (90 day) addition of section, see jr or Law 14-132.

§ 202 of Home Loan Protection Emergency Act of s ofui 1 M 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR ' '

2534).

see notes following

Notes of Decisions

Ability to make payments
Covered loan 1
Equitable estoppel 2

1. Covered loan

Borrower's residential mortgage was not "cov-
ered loan" under District of Columbia law, absent
evidence that annual percentage rate on loan ex-
ceeded yield on United States Treasury securities,
having comparable rates of maturity, by more than
six percentage points. Richards v. Option One
Mortg. Corp., 2010, 682 F.Supp.2d 40, affirmed 403
Fed.Appx. 523, 2010 WL 5139417. Mortgages e=>
211

Material issues of fact existed as to whether it
was reasonable for a lender to conclude, in extend-
ing mortgage loan, that borrower would be able to
obtain refinancing for loan in light of her equity in
condominium and improvement in her credit rating
that purportedly would result after she made one
year of payments on loan, precluding summary
judgment for settlement company on borrower's
claim under District of Columbia Home Loan Pro-
tection Act (HLPA) on grounds that even if compa-
ny qualified as lender under HLPA, it did not
make covered loan to borrower at a time when she
reasonably could not have been expected to make
scheduled balloon payment. Sloan ex rel. Juer-
gens v. Urban Title Sendees, Inc., 2009, 652
F.Supp.2d 40. Federal Civil Procedure <^ 2491.8

Mortgagor's refinancing loan amount of $427,500
exceeded conforming loan size limit necessary to
be covered under District of Columbia Home Loan

Protection Act (HLPA); at time of loan, Federal
National Mortgage Association had set $417,000 as
limit. Palmer v. GMAC Commercial Mortg., 2009,
628 F.Supp.2d 186. Consumer Credit <£=> 33.1

2. Equitable estoppel

In arguing that borrower was equitably es-
topped from pursuing claim against lender and
mortgage broker under District of Columbia's
Home Loan Protection Act (HLPA) on grounds
that she supplied materially incorrect information
in connection with her mortgage loan application,
lender and broker could not rely upon statute
permitting lenders to challenge borrower HLPA
claims in situations in which violation arose from
borrower's provision of materially false information
in connection with loan application, given failure of
lender and broker to make requisite reasonable
attempt to verify borrower's current and expected
income and debts. In re Dawson, 2008, 411 B.R. 1,
subsequent determination 437 B.R. 15. Consumer
Credit <&=» 33.1; Estoppel <&=» 54

3. Ability to make payments

Lender did not satisfy his obligation under Dis-
trict of Columbia's Home Loan Protection Act
(HLPA) to verify borrower's ability to repay loan
by looking only to whether, if property securing
loan was sold, borrower would have sufficient pro-
ceeds to make balloon payment under loan; lender
had broader obligation to determine whether bor-
rower could reasonably be expected to make all
scheduled payments, including monthly payments.
In re Dawson, 2008, 411 B.R. 1, subsequent deter-
mination 437 B.R. 15. Consumer Credit <£=> 4

§ 26-1152.03. Restrictions on the financing; of single-premium credit insur-
ance.

A lender shall not sell any individual or group credit life, accident, health, or unemployment
insurance product on a prepaid single premium basis in conjunction with a covered loan.
Credit insurance sold by a lender on a basis other than a prepaid single premium shall be
accompanied by a clear and conspicuous disclosure, provided at least 3 days before closing,
stating that the credit insurance shall not be a condition to the extension of mortgage credit
and that the borrower may elect not to purchase the insurance. Insurance premiums or debt

202

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1152.06

cancellation or suspension fees calculated and paid on a monthly or bi-weekly basis shall not
be considered financed by the lender; provided, that the disclosure required by this section
shall be provided to the borrower for any insurance, debt cancellation, or suspension seivices
purchased by the borrower.
(May 7, 2002, D.C. Law 14-132, § 203, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 203 of Home Loan Protection Emergency Act of § 2fi-1 1^1 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR

2534).

§ 26-1152.04. Restriction on financing origination/discount points and fees.

If a lender refinances a loan secured by the same residential real property to the same
borrower which was made 18 months or less before the covered loan is made, the same lender
shall not finance, directly or indirectly, any portion of the covered loan's origination/discount
points and fees or other fees payable to the lender or any third party in excess of the greatest
of 3% of the new covered loan principal amount actually funded, $400, or such amount as the
Mayor may establish by regulation, excluding:

(1) Reasonable charges described in 12 C.F.R. § 226.4(c)(7)(i), (iii), ( iv), and (v); and

(2) Bona fide loan discount points.

(May 7, 2002, D.C. Law 14-132, § 204, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 204 of Home Loan Protection Emergency Act of § o^? i i n ni
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR '

2534).

§ 26-1152.05. No encouragement of default

A lender shall not recommend or encourage the borrower to default on an existing loan or
other debt prior to and in connection with the closing or planned closing of a covered loan
that refinances all or any portion of the existing loan or other debt.
(May 7, 2002, D.C. Law 14-132, § 205, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 205 of Home Loan Protection Emergency Act of « 96-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR * * '

2534).

§ 26-1152.06. Unfair steering- or improper use of credit scores.

(a) A lender shall not steer, counsel, or direct any prospective borrower to accept a loan
product with a risk grade less favorable than the risk grade that the borrower would qualify
for based on that lender's then current underwriting guidelines, prudently applied, consider-
ing the information available to that lender, including the information provided by the
borrower. A lender shall not violate this section if the risk grade determination applied to a
borrower is reasonably based on the lender's underwriting guidelines and if it is an
appropriate risk grade category for which the borrower qualifies with the lender.

(b) The lender shall not make, or cause to be made, any false, deceptive, or misleading
statement, representation, or determination regarding the borrower's ability to qualify for
any mortgage product or the borrower's credit score.

(May 7, 2002, D.C. Law 14-132, § 206, 49 DCR 2551.)

203

§ 26-1152.06 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or L aw 14.132, see notes following

§ 206 of Home Loan Protection Emergency Act of § 9fi_iiM 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR

2534).

§ 26-1152.07 Failing to report favorable payment record.

A lender or its servicer shall report a borrower's favorable payment history and informa-
tion to a nationally recognized credit-reporting agency at least once every 12 months. This
section shall not prevent a lender or its servicer from agreeing with the borrower not to
report payment history information and shall not apply to covered loans held or serviced by a
lender for less than 90 days. Nothing in this section shall prevent a lender from reporting a
borrower's unfavorable payment history.
(May 7, 2002, D.C. Law 14-132, § 207, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see jr or L aw 14-132, see notes following

§ 207 of Home Loan Protection Emergency Act of & 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR " '

2534).

§ 26-1152.08. Home improvement contracts.

(a) A lender shall not pay a contractor under a home improvement contract from the
proceeds of a covered loan other than by an instrument payable to the borrower or jointly
payable to the borrower and the contractor or, at the election of the borrower, through a
third -party escrow agent that is independent from the contractor in accordance with the
terms established in a written agreement signed by the borrower, the mortgage lender, and
the contractor prior to the disbursement of funds to the contractor. The borrower shall be
responsible for any reasonable fees or costs associated with the election. A lender may
conclusively rely on a certified written statement from either the contractor or the third-party
escrow agent that states that the escrow agent and contractor are independent from each
other.

(b) A lender shall not purchase a home improvement contract in connection with, or make
an instrument payable to, a home improvement contractor that is not bonded with the District
pursuant to subchapter IV of Chapter 28 of Title 47. The Mayor shall maintain a list of home
improvement contractors that are bonded and in good standing. Unless the lender has notice
that the contractor is not licensed or authorized to do business in the District, a lender who
relies on the list within 60 days of the closing shall be considered in compliance with this
section; provided, that the lender has provided the Mayor with a name, telephone number,
mailing address, and electronic mail address of a contact person to whom the Mayor can
provide updates or amendments to the list required by this subsection.

(May 7, 2002, D.C. Law 14-132, § 208, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

* L°n temporary W day) addition of section, see For Law 14 ^ 132 see notes following

9 208 01 Home Loan Protection Emergency Act of § o fi _i 1 ci ni
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR S mi.ui.
2534).

§ 26-1152.09. No increase in interest rate upon default

A lender shall not make a covered loan that includes a provision that increases the covered
loan's interest rate upon a default. This section shall not apply to an interest rate increase in
adjustable rate covered loans based on a recognized adjustable rate mortgage index and

204

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1152.11

constant margin amount if an event of default or the acceleration of the maturity date of the
covered loan does not cause or permit the increase in the interest rate.
(May 7, 2002, D.C. Law 14-132, § 209, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 209 of Home Loan Protection Emergency Act of § 96-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR
2534).

§ 26-1152.10. Charges in bad faith.

A lender shall not charge and retain fees paid by the borrower in making a covered loan
which are:

' (1) For services that are not actually performed;

(2) For loan discount points which are not bona fide discount points; or

(3) In violation of the Real Estate Procedures Settlement Act of 1974, approved
December 22, 1974 (88 Stat. 1724; 12 U.S.C. § 2601 et seq.).

(May 7, 2002, D.C. Law 14-132, § 210, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 210 of Home Loan Protection Emergency Act of § ofi-1 1 51 01

2002 (D.C. Act 14-295, March 1, 2002, 49 DCR ' "
2534).

Notes of Decisions

Fees 1 gage loan were impermissible charges for services

__ not actually performed or for loan discount points

that were not bona fide discount points in violation

1. Fees of District of Columbia's Home Loan Protection

Borrower failed to establish that consulting fee Act (HLPA). In re Dawson, 2008, 411 B.R. 1,

of $5,000 paid to mortgage broker and lender's fee subsequent determination 437 B.R. 15. Consumer

of $5,000 paid in connection with her home mort- Credit < s= > 11

§ 26-1152.11. Failure to timely send disclosure notice.

(a) In making a covered loan, a lender shall send to the borrower a Red Flag Warning
Disclosure Notice.

(b) This notice shall be received by the borrower at least 3 business days prior to closing of
the loan.

(c) If the loan is originated with the assistance of a mortgage broker, the mortgage broker
shall provide the Red Flag Warning Disclosure Notice.

(d) Only one Red Flag Warning Disclosure Notice must be provided to each borrower,

(e) The Mayor shall promulgate, by regulation, the Red Flag Warning Disclosure Notice
and instructions for completing, executing, and sending the disclosure notice. The Mayor
may revise the disclosure notice or instructions at any time not less than 90 days in advance
of the publication in the District of Columbia Register. After the publication of a revised
disclosure notice or revised instructions, either the existing or revised instructions may be
followed and either the existing or revised disclosure notice shall be accepted until the
advance publication period expires.

(May 7, 2002, D.C. Law 14-132, § 211, 49 DCR 2551.)

205

§ 26-1 152. 11 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 211 of Home Loan Protection Emergency Act of a 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR ' '

2534).

§ 26-1152.12. Prepayment premium, fee or charge.

A lender shall not include in a covered loan or collect or attempt to collect any prepayment
premium, fee, or charge in violation of Chapter 33 of Title 28.
(May 7, 2002, D.C. Law 14-132, § 212, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see F or Law 14-132, see notes following

§ 212 of Home Loan Protection Emergency Act of * 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR ' '

2534).

§ 26-1152.13. Limitations on balloon payments.

A lender shall not make a covered loan that provides for a scheduled payment that is more
than twice as large as the average of earlier scheduled monthly payments unless the balloon
payment becomes due and payable not less than 7 years after the date of the loan closing.
This section shall not apply if the payment schedule is adjusted to account for the seasonal or
irregular income of the borrower or if the loan is a bridge loan connected with or related to
the acquisition or construction of a dwelling intended to become the borrower's principal
dwelling.
(May 7, 2002, D.C. Law 14-132, § 213, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 213 of Home Loan Protection Emergency Act of & o/?_ 1 1 n m
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR

2534).

Notes of Decisions

Construction and application 1 loan closing, and which did not fall within statutory

exceptions for bridge loans and for payment sched-
" ules adjusted to account for borrower's seasonal or
^ A A . 1 .. ,. irregular income, violated District of Columbia's
1. Construction and application Home Loan Protection Act (HL p A ). In re Daw-
Mortgage loan which provided for balloon pay- son, 2008, 411 B.R. 1, subsequent determination
ment to become due and payable six months after 437 B.R. 15. Consumer Credit <J^> 4

§ 26-1152.14. No call provision.

A lender shall not make a covered loan that includes a call provision that permits the
lender, in its sole discretion, to accelerate the indebtedness; provided, that this prohibition
shall not apply when repayment of the covered loan has been accelerated by a bona fide
default or pursuant to some other provision of the loan agreement unrelated to the payment
schedule.
(May 7, 2002, D.C. Law 14-132, § 214, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments 2002 (D.C. Act 14-295, March 1, 2002, 49 DCR

For temporary (90 day) addition of section, see 2534).
§ 214 of Home Loan Protection Emergency Act of

206

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1152.18

Legislative History of Laws

For Law 14-132, see notes following
§ 26-1151.01.

§ 26-1152.15. No negative amortization.

A lender shall not make a covered loan with a payment schedule with regular periodic
payments that causes the principal balance to increase.
(May 7, 2002, D.C. Law 14-132, § 215, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 215 of Home Loan Protection Emergency Act of g 26-1151 01

2002 (D.C. Act 14-295, March 1, 2002, 49 DCR * '

2534).

§ 26-1152.16. No advance payments.

A lender shall not make a covered loan that includes terms under which any periodic
payments required under the loan are paid in advance from loan proceeds.
(May 7, 2002, D.C. Law 14-132, § 216, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p r Law 14-132, see notes following

§ 216 of Home Loan Protection Emergency Act of § 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR ' '

2534).

§ 26-1152.17. No advance waivers.

A provision in a covered loan whereby a borrower waives in advance a violation of this
chapter shall be void.
(May 7, 2002, D.C. Law 14-132, § 217, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see For Law 14-132, see notes following

§ 217 of Home Loan Protection Emergency Act of § 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR '

2534).

§ 26-1152.18. No oppressive mandatory arbitration clause.

(a) A mandatory arbitration clause in a note, lien, instrument, or ancillary lien instrument
or obligation that evidences or secures a covered loan that is oppressive, unfair, unconsciona-
ble, or in substantially in derogation of the rights of borrowers shall be void.

(b) Arbitration clauses that comply with the standards adopted by the Mayor pursuant to
regulation shall be presumed not to violate this section; provided, the Mayor's standards be
in accordance with the procedures of a nationally recognized arbitration forum such as the
American Arbitration Association.

(May 7, 2002, D.C. Law 14-132, § 218, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments 2002 (D.C. Act 14-295, March 1, 2002, 49 DCR

For temporary (90 day) addition of section, see 2534).
§ 218 of Home Loan Protection Emergency Act of

207

§ 26-1152.18 BANKS AND OTHER FINANCIAL INSTITUTIONS

Legislative History of Laws

For Law 14-132, see notes following
§ 26-1151.01.

§ 26-1152.19. Homeownership counseling.

A lender shall inform a borrower of his or her right to obtain counseling in connection with
a covered loan. A Red Flag Warning Disclosure Notice shall satisfy this requirement.
(May 7, 2002, D.C. Law 14-132, § 219, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 219 of Home Loan Protection Emergency Act of * 96-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR
2534).

§ 26-1152.20. Broker licensor.

Upon initiation of a business relationship with a mortgage broker, a lender shall verify that
each mortgage broker with whom it does business in connection with making a covered loan is
licensed or otherwise authorized to do business in the District. After verifying that the
broker is licensed or authorized to do business in the District, the lender shall be entitled
thereafter to rely upon a signed written statement by the mortgage broker that the mortgage
broker is duly authorized to conduct business in the District unless the lender has notice that
the mortgage broker is not licensed or authorized to do business in the District; provided,
that the lender has provided the Mayor with a name, telephone number, mailing address, and
electronic mail address of a contact to whom the Mayor can provide updates or amendments
to the list of licensed brokers.

(May 7, 2002, D.C. Law 14-132, s s 220, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or L aw 14-132, see notes following

§ 220 of Home Loan Protection Emergency Act of s 26—11^1
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR * '

2534).

§ 26-1152.21. Filing requirements.

(a) Within 14 days following the funding of a covered loan, a lender otherwise subject to
the jurisdiction of the Mayor shall submit to the Mayor a loan package including copies of the
following documents:

(1) The settlement statement;

(2) The FP-7 Form filed with the Recorder of Deeds;

(3) The final Tnrth in Lending Act disclosure; and

(4) The note.

(b) In its transmittal of the loan package required by subsection (a) of this section, the
lender shall certify that each of the documents provided are true copies of the original
documents.

(c) The loan package submitted pursuant to subsection (a) of this section shall remain
confidential and exempt from disclosure under any law except to the borrower, a lender
involved in the covered loan transaction, or current noteholder.

(May 7, 2002, D.C. Law 14-132, § 221, 49 DCR 2551.)

208

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1153.01

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see For L aw 14-132, see notes following

§ 221 of Home Loan Protection Emergency Act of § ^fi-ii^i m
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR * ^^i.vi.
2534).

§ 26-1152.22. Suspect settlement service providers.

The Mayor may create and maintain a public list of lenders and other settlement service
providers, including real estate agents and appraisers, who have been found by a court to
have engaged in a systematic pattern or practice of fraud or in operations in violation of the
requirements of District law.
(May 7, 2002, D.C. Law 14-132, § 222, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see For Law 14-132, see notes following

§ 222 of Home Loan Protection Emergency Act of * 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR ' '

2534).

§ 26-1152.23. Median family income.

The Mayor shall periodically publish or make available to lenders median family income for
Washington, D.C. that may be relied upon by lenders for purposes of this chapter.

(May 7, 2002, D.C. Law 14-132, § 223, 49 DCR 2551; Oct. 19, 2002, D.C. Law 14-213, § 42(a), 49 DCR
8140.)

Historical and Statutory Notes

Effect of Amendments Law 14-213, the "Technical Amendments Act of

D.C. Law 14-213 deleted "the" before "Washing- 2002", was introduced in Council and assigned Bill

ton D.C". No. 14-671, which was referred to the Committee

Emergency Act Amendments of the Whole. The Bill was adopted on first and

For temporary (90 day) addition of section, see second readings on June 4, 2002, and July 2, 2002,

§ 223 of Home Loan Protection Emergency Act of respectively. Signed by the Mayor on July 26,

2002 (D.C. Act 14-295, March 1, 2002, 49 DCR 2002, it was assigned Act No. 14-459 and transmit-

2&>4). ted to both Houses of Congress for its review.

Legislative History of Laws D .C. Law 14-213 became effective on October 19,

For Law 14-132, see notes following 2002
§ 26-1151.01.

Subchapter III. Violations and Remedies; Enforcement and Civil Liability.

§ 26-1153.01. Violations and remedies.

(a) The Mayor or any borrower under a covered loan may recover damages for a lender's
violation of § 26-1151.02 or subchapter II of this chapter.

(b) Notwithstanding subsection (a) of this section, if the violation of § 26-1151.02 or
subchapter II of this chapter was caused by the borrower, his or her employer, or a creditor
providing materially incorrect information to the lender, which inaccuracy the lender did not
discover prior to the covered loan funding, and if the lender reasonably attempted to verify
the current and expected income and current debts of the borrowers in accordance with
§ 26-1152.02(c), the lender shall not be liable.

(1) Reformation of the covered loan to correct or remove an unfair term or a term
obtained in violation of § 26-1151.02 or subchapter II of this chapter, whichever is
applicable as of the date of initial funding;

(2) Actual damages;

209

§ 26-1153.01 BANKS AND OTHER FINANCIAL INSTITUTIONS

(3) Injunctive relief;

(4) Reasonable attorneys' fees and costs; or

(5) Statutory damages in an amount to be determined by the finder of fact if the finder
of fact determines that the lender has engaged in a systematic pattern of practices and
acted in violation of § 26-1151.02 or subchapter II of this chapter.

(d) An action for violation of § 26-1151.02 or subchapter II of this chapter shall be filed no
later than 3 years after the violation has been discovered or should have been discovered.

(e)(1) A lender making a covered loan who, when acting in good faith, fails to comply with
§ 26-1151.02 or subchapter II of this chapter, shall not be deemed to have violated
§ 26-1151.02 or subchapter II of this chapter if the lender establishes one of the following:

(A) Without regard to who discovered the error, within 120 days of the covered loan
initial funding and prior to the institution of judicial process under this section, the
borrower was notified of the violation, appropriate restitution was made, and whatever
adjustments are necessary were made to the covered loan, at the choice of the lender, to:

(i) Conform the covered loan to the requirements of § 26-1151.02 or subchapter II
of this chapter;

(ii) Materially change the terms of the covered loan to benefit the borrower; or
(iii) Remove the features that caused the loan to be considered a covered loan.

(B) The violation resulted from a bona fide error notwithstanding the lender's mainte-
nance of procedures reasonably designed to avoid the error and, within 60 days after the
discovery of the compliance failure and prior to the filing of an action under this section,
the borrower was notified of the compliance failure, appropriate restitution was made,
and whatever adjustments are necessary were made to the covered loan, at the choice of
the lender, to:

(i) Conform the covered loan to the requirements of § 26-1151.02 or subchapter II
of this chapter;

(ii) Materially change the terms of the covered loan to benefit the borrower; or
(iii) Remove the features that caused the loan to be considered a covered loan.

(2) If the lender fails to comply with § 26-1152.11 or section 129(a) and (b) of the Truth
in Lending Act in the case of a lender covered by § 26-1151.02, the lender shall not be
deemed to have violated § 26-1151.02 or subchapter II of this chapter, only if:

(A) The lender satisfies paragraph (l)(A)(i) or (B)(ii) of this subsection;

(B) The lender provided the borrower with a disclosure notice prior to the closing of
the covered loan; and

(C) The failure to comply with § 26-1152.11, or section 129(a) or (b) of the Truth in
Lending Act in the case of a lender covered by § 26-1151.02, shall not have been shown
to be part of a pattern or practice of such non-compliance.

(3) For the purposes of this subsection, a bona fide error shall include clerical error or,
calculation, computer malfunction, and programming and printing errors. An error of legal
judgment with respect to a lender's obligations under § 26-1151.02 or subchapter II of this
chapter shall not constitute a bona fide error.

(f) No provision of this chapter shall be applied or interpreted to bar a borrower from
bringing an action in an appropriate court of competent jurisdiction pursuant to any District
or federal law for damages, injunctive relief, or any other relief.

(g) The remedies provided in this chapter shall be the sole and exclusive remedies for the
violation of any provision of this chapter.

(May 7, 2002, D.C. Law 14-132, § 301, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see For Law 14-132, see notes following

§ 301 of Home Loan Protection Emergency Act of § o fi _i i r-, m

2002 (D.C. Act 14-295, March 1, 2002. 49 DCR * i^.ui.
2534).

210

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1153.03

References in Text

Sections 129(a) and (b) of the Truth in Lending
Act, referred to in subsecs. (e)(2) and (e)(2)(C), is
classified to 15 U.S.C.A. § 1639(a) and (b).

Notes of Decisions

Reformation of loan 1 creased interest rate of 24 percent in event of

default, extension, to seven-year period, of due

date upon which balloon payment became payable,

1 D , ,, fil reduction of balance due by amount of any penal -

1. Reformation of loan ,. e , , , , • . , • -. ,

ties or fees traced to rate increases triggered by

Violations of District of Columbia's Home Loan balloon-payment due date, reduction of note's 10

Protection Act (HLPA) by mortgage broker and percent late fee to statutory limit of five percent,

lender warranted reformation of loan on terms and striking of note's provision for reinstatement

consistent with acceptable consumer lending prac- fee based upon entire loan balance. In re Dawson,

tices, including reinstatement of original interest 2008, 411 B.R. 1, subsequent determination 437

rate and elimination of provision allowing for in- B.R. 15. Consumer Credit <§=» 67

§ 26-1153.02. Enforcement.

The Mayor may conduct examinations and investigations, and issue orders to enforce the
provisions of this chapter, with respect to lenders over which it otherwise has jurisdiction.
The Mayor may examine any relevant instrument, document, account, book, record, or file of
a lender over which the Mayor has jurisdiction. The Mayor may recover the reasonable cost
of the examinations and investigations from the lender. A lender shall maintain records
which allow the Mayor to determine compliance with this chapter and any regulations
promulgated hereunder.
(May 7, 2002, D.C. Law 14-132, § 302, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see For Law 14-132, see notes following

§ 302 of Home Loan Protection Emergency Act of § 9fi-l 1 ^1 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR

2534).

§ 26-1153.03. Administrative penalties.

(a) If the Mayor determines that a person has violated this chapter, the Mayor may impose
one or more of the following penalties:

(1) A civil penalty imposed as follows:

(A) $1,000 for the first violation;

(B) For the second and each subsequent violation occurring within a 24-month period
of a prior violation, twice the immediately preceding civil penalty imposed (or which could
have been imposed).

(2) Order a person to cease and desist from engaging in any violation of this chapter and
to make restitution for actual damages to the borrower.

(b) If the Mayor determines that any person has a systematic pattern of violations of this
chapter, the Mayor may impose one or more of the following penalties in addition to the
penalties set forth in subsection (a) of this section:

(1) Suspend, revoke, or refuse to renew any license issued by the Mayor;

(2) Prohibit or suspend an individual responsible for a violation of this chapter from
working in his or her present capacity or in any other capacity related to the activities
regulated by the Mayor; or

(3) Obtain an injunction or other process against any person to restrain and prevent the
person from engaging in any activity violating this chapter.

(May 7, 2002, D.C. Law 14-132, § 303, 49 DCR 2551.)

211

§ 26-1153.03 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 303 of Home Loan Protection Emergency Act of § 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR l "' '

2534).

§ 26-1153.04. Final decision.

A decision of the Mayor under § 26-1153.03 shall be a final order for the purposes of
subchapter I of Chapter 5 of Title 2, and shall be enforceable in a court of competent
jurisdiction. The Mayor shall publish the final decisions, subject to redaction or modification
to preserve confidentiality. Any person aggrieved by a final decision of the Mayor pursuant
to this subchapter may appeal the decision to Superior Court of the District of Columbia.
(May 7, 2002, D.C. Law 14-132, § 304, 49 DCR 2551.)

Historical and Statutory Notes

Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or Law 14-132, see notes following

§ 304 of Home Loan Protection Emergency Act of « 28-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR
2534).

§ 26-1153.05. Assignee liability.

(a) Any person who purchases or is otherwise assigned a covered loan shall be subject to
all claims and defenses with respect to the covered loan that the borrower could assert
against the originator of the covered loan, unless the purchaser or assignee demonstrates, by
a preponderance of the evidence, that a reasonable person exercising ordinary due diligence
could not determine that the loan was a covered loan for the purposes of this chapter, based
on:

(1) The documentation required by § 26-1151.02 or subchapter II of this chapter;

(2) The itemization of the amount financed; and

(3) Other disclosure of disbursements.

(b) Nothing in subsection (a) of this section shall affect the rights of a borrower under any
other provision of this chapter.

(1) With respect to actions based upon a violation of this chapter, the amount of actual
damages; and

(2) With respect to all other causes of action, the sum of:

(A) The amount of all remaining indebtedness; and

(B) The total amount paid by the consumer in connection with the transaction, reduced
by the amount of any damages awarded under paragraph (1) of this subsection.

(d) Any person who sells or otherwise assigns a covered loan shall include a prominent
notice, in the form as provided by the Mayor pursuant to rules of the potential liability under
this section.

(May 7, 2002, D.C. Law 14-132, § 305, 49 DCR 2551; Apr. 13, 2005, D.C. Law 15-354, § 38, 52 DCR

2638.)

Historical and Statutory Notes

Effect of Amendments 2002 (D.C, Act 14-295, March 1, 2002, 49 DCR

D.C. Law 15-354, in subsec. (c)(2), validated a 2534).

previously made technical correction. T . , ,. TT . J

tp, . , . , Legislative History of Laws

Emergency Act Amendments

For temporary (90 day) addition of section, see For r Law 14 ~ 132 > see notes Allowing

§ 305 of Home Loan Protection Emergency Act of b 26-1151.01.

212

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1217

For Law 15-354, see notes following
§ 26-551.05.

Subchapter IV. Rulemaking.

§ 26-1154.01. Rulemaking authority.

The Mayor shall promulgate rules in accordance with Chapter 5 of Title 2, to carry out the
purposes of this chapter. The rules shall be promulgated within 90 days of May 7, 2002.
(May 7, 2002, D.C. Law 14-132, § 401, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see For Law 14-132, see notes following

§ 401 of Home Loan Protection Emergency Act of s 26-1151 01
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR ' '

2534).

Subchapter V. Applicability.

§ 26-1155.01. Applicability.

(a) Subchapters I through III of this chapter shall apply 60 days after the effective date of
the regulations promulgated by the Mayor pursuant to this chapter.

(b) The provisions of this chapter shall be interpreted and applied to the fullest extent
practical in a manner consistent with applicable federal laws and regulations. Nothing in this
chapter is intended to preempt federal laws and regulations.

(May 7, 2002, D.C. Law 14-132, § 501, 49 DCR 2551.)

Historical and Statutory Notes
Emergency Act Amendments Legislative History of Laws

For temporary (90 day) addition of section, see p or L aw 14-132, see notes following

§ 501 of Home Loan Protection Emergency Act of § 9fi_i i n n-i
2002 (D.C. Act 14-295, March 1, 2002, 49 DCR
2534).

Chapter 12
Savings and Loan Acquisition.

Section

26-1217. Use of minority-owned savings and loan
associations.

§ 26-1217. Use of minority-owned savings and loan associations.

(a) Recipients of the District of Columbia government contracts are encouraged to use
federally and District chartered minority-owned savings and loan associations certified by the
Small and Local Business Opportunity Commission in accordance with subchapter IX-A of
Chapter 2 of Title 2.

(Oct. 12, 1988, D.C. Law 7-175, § 17a, as added Mar. 16, 1989, D.C. Law 7-187, § 3(b), 35 DCR 8648;
October 4, 2000, D.C. Law 13-169, § 7, 47 DCR 5846; Oct, 20, 2005, D.C. Law 16-33, § 2381(b), 52 DCR
7503.)

213

§ 26-1217 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes
Effect of Amendments cordance with the District of Columbia Minority

D.C. Law 16-33, in subsec. (a), substituted Contracting Act of 1976".
"Small and Local Business Opportunity Commis- Section 11(b) of D.C. Law 13-216 provides that

sion in accordance with subchapter IX- A of Chap- the act shall expire after 225 days of its having
ter 2 of Title 2" for "District of Columbia Local taken effect.
Business Opportunity Commission in accordance E enc Act Amendments

with subchapter IX of Chapter 2 of Title 2".

ror temporary (90 day) amendment oi section,
Temporary Amendments of Section gee § 23gl(b) of Fiscal Year 2006 Budget Support

Section 7 of D.C. Law 13-216, in subsec. (a), Emergency Act of 2005 (D.C. Act 16-168, July 26,

substituted "District of Columbia Local Business 2005, 52 DCR 7667).
Opportunity Commission in accordance with the e islative Histo ^ of Laws

Equal Opportunity for Local, Small, and Disad- J; x ^ „ _ _ H

vantaged Business Enterprises Act of 1998" for For Law 13 " 216 ' see notes following § 26-/11.

"Minority Business Opportunity Commission in ac- For Law 16-33, see notes following § 26-711.

Chapter 13
Trust, Loan, Mortgage, Safe Deposit and Title Corporations.

Subchapter I. Genera!. Section

26-1310. Appointment as fiduciary.

Section 26-1333, Security required for performance of

26-1309. Powers of companies; liability as trus- fiduciary duties; liability thereon,

tee. 26-1334. Powers of probate court.

Subchapter L General,

§ 26-1309. Powers of companies; liability as trustee.

All companies organized under this chapter are hereby declared to be corporations
possessed of the powers and functions of corporations generally, and shall have power:

(1) To make contracts;

(2) To sue and be sued, plead and be impleaded, in any court as fully as natural persons;

(3) To make and use a common seal and alter the same at pleasure;

(4) To loan money; and

(5) When organized under clause (1) of § 26-1301, to accept and execute trusts of any
and every description which may be committed or transferred to them, and to accept the
office and perform the duties of receiver, assignee, personal representative, special adminis-
trator, guardian of the estate of minors with the consent of the guardian of the person of
such minor, and committee of the estates of people with mental illness or mental
retardation whenever any trusteeship or any such office or appointment is committed or
transferred to them, with their consent, by any person, body politic or corporate, or by any
court in the District of Columbia; and all such companies organized under clause (1) of
§ 26-1301 are further authorized to accept deposits of money for the purposes designated
herein, upon such terms as may be agreed upon from time to time with depositors, and to
act as agent for the purpose of issuing or countersigning the bonds or obligations of any
corporation, association, municipality, or state, or other public authority, and to receive and
manage any sinking fund on any such terms as may be agreed upon, and shall have power
to issue its debenture bonds upon deeds of trust or mortgages of real estate to a sum not
exceeding the face value of said deeds of trust or mortgages, and which shall not exceed 50
percent of the fair cash value of the real estate covered by said deeds or mortgages, to be
ascertained by the Superintendent of Banking and Financial Institutions; but no debenture
bonds shall be issued until the securities on which the same are based have been placed in
the actual possession of the trustee named in the debenture bonds, who shall hold said
securities until all of said bonds are paid; and when organized under clause (2) of
§ 26-1301 said company is authorized to insure titles to real estate and to transact
generally the business mentioned in said clause; and when organized under clause (3) of

214

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1333

§ 26-1301 said company is hereby authorized, in addition to the loan and mortgage
business therein mentioned, to secure, guarantee, and insure individuals, bodies politic,
associations, and corporations against loss by or through trustees, agents, servants, or
employees, and to guarantee the faithful performance of contracts and obligations of
whatever kind entered into by or on the part of any person or persons, association,
corporation, or corporations, and against loss of every kind; provided, that any corpora-
tions formed under the provisions of this chapter when acting as trustee shall be liable to
account for the amounts actually earned by the moneys held by it in trust in addition to the
principal so held; but such corporation may be allowed a reasonable compensation for
services performed in the care of the trust estate.

(Mar. 3, 1901, 31 Stat. 1304, ch. 854, § 721; June 24, 1980, D.C. Law 3-72, § 207(a), 27 DCR 2155; Nov.

23, 1985, D.C. Law 6-63, § 106(a)(8), as added Apr. 11, 1986, D.C. Law 6-107, § 2(k), 33 DCR 1168; Apr.
9, 1997, D.C. Law 11-255, § 24(c), 44 DCR 1271; Apr. 24, 2007, D.C. Law 16-305, § 38, 53 DCR 6198.)

Historical and Statutory Notes
Effect of Amendments in Council and assigned Bill No. 16-664, which was

D.C. Law 16-305, in par. (5). substituted "people referred to Committee on the Whole. The Bill was
with mental illness or mental retardation" for "lu- adopted on first and second readings on June 20,

natics and idiots". i°°V nd My }\* ^o^! 1 ^^ Slgn f A b ?

the Mayor on July 17, 2006, it was assigned Act
Legislative History of Laws No . 16-437 and transmitted to both Houses of

Law 16-305, the "People First Respectful Lan- Congress for its review. D.C. Law 16-305 became
guage Modernization Act of 2006", was introduced effective on April 24, 2007.

§ 26-1310. Appointment as fiduciary.

In all cases in which application shall be made to any court in the District of Columbia, or
wherever it becomes necessary or proper for said court to appoint a trustee, receiver,
personal representative, special administrator, guardian of the estate of a minor, or committee
of the estate of a person with mental illness, it shall and may be lawful for said court (but
without prejudice to any preference in the order of any such appointments required by law) to
appoint any such company organized under clause (1) of § 26-1301, with its assent, such
trustee, receiver, personal representative, special administrator, committee, or guardian, with
the consent of the guardian of the person of such minor; provided, however, that no court or
judge who is an owner of or in any manner financially interested in the stock or business of
such corporation shall commit by order or decree to any such corporation any trust or
fiduciary duty.
(Mar. 3, 1901, 31 Stat. 1305, ch. 854, § 722; June 24, 1980, D.C. Law 3-72, § 207(b), 27 DCR 2155; Apr.

24, 2007, D.C. Law 16-305, § 39(a), 53 DCR 6198.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 16-305 substituted "person with men- For Law i 6 -305, see notes following § 26-1309.

tal illness" for "lunatic".

§ 26-1333. Security required for performance of fiduciary duties; liability

thereon.

No bond or other collateral security, except as hereinafter stated, shall be required from
any trust company incorporated under this chapter for and in respect to any trust, nor when
appointed trustee, guardian, receiver, personal representative, special administrator, commit-
tee of the estate of a person with a mental illness or mental retardation, or other fiduciary
appointment; but the capital stock subscribed for or taken, and all property owned by said
company and the amount for which said stockholders shall be liable in excess of their stock,
shall be taken and considered as the security required by law for the faithful performance of
its duties, and shall be absolutely liable in case of any default whatever; and in case of the
insolvency or dissolution of said company, the debts due from the said company as trustee,
guardian, receiver, personal representative, special administrator, or committee of the estate
of a person with mental illness or mental retardation or any other fiduciary appointment shall
have a preference.

(Mar. 3, 1901, 31 Stat. 1309, ch. 854, § 745; June 24, 1980, D.C. Law 3-72, § 207(g), 27 DCR 2155; Apr.
24, 2007, D.C. Law 16-305, § 39(b), 53 DCR 6198.)

215

§ 26-1333

BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 16-305 substituted "person with men- p or Law 16-305, see notes following i

tal illness or mental retardation" for
idiot" and "lunatics, idiots'

"lunatic or

26-1309.

§ 26-1334. Powers of probate court.

The court having probate jurisdiction, or any judge thereof, shall have power to make
orders respecting such company whenever it shall have been appointed trustee, guardian,
receiver, personal representative, special administrator, committee of the estate of a person
with mental illness or mental retardation or any other fiduciary, and require the said
company to render all accounts which might lawfully be made or required by any court or any
judge thereof if such trustee, guardian, receiver, personal representative, special administra-
tor, committee of the estate of a person with mental illness or mental retardation or fiduciary
were a natural person. And said court, or any judge thereof, at any time, on application of
any person interested, may appoint some suitable person to examine into the affairs and
standing of such companies, who shall make a full report thereof to the court, and said court,
or any judge thereof, may at any time, in its discretion, require of said company a bond with
sureties or other security for the faithful performance of its obligations, and such sureties or
other security shall be liable to the same extent and in the same manner as if given or
pledged by a natural person.

(Mar. 3, 1901, 31 Stat. 1309. eh. 854, § 746; June 25, 1936, 49 Stat. 1921, ch. 804; June 25, 1948, 62 Stat.
991, ch. 646, § 32(a), (b); May 24, 1949, 63 Stat, 107, ch. 139, § 127; July 29, 1970, 84 Stat, 576, Pub. L.
91-358, title I, § 158(c)(4); June 24, 1980, D.C. Law 3-72, § 207(h), 27 DCR 2155; Apr. 24, 2007, D.C.
Law 16-305, § 39(c), 53 DCR 6198.)

Historical and Statutory Notes
Effect of Amendments Legislative History of Laws

D.C. Law 16-305 substituted "person with men- For L aw 16-305, see notes following j

tal illness or mental retardation" for "lunatic, idi-
ot." and 'lunatic or idiot,".

26-1309.

Chapter 14
Universal Bank Certification.

Subchapter I. General Provisions.

Section

26-1401.01. Short title.
26-1401.02. Definitions.

Subchapter II. Application and Certification
as a Universal Bank.

26-1401.03.

26-1401.04.
26-1401.05.

26-1401.06.

Application to be certified as a uni-
versal bank; review and approval
or disapproval of application.

Issuance of certificate of authority.

Revocation or subsequent limitation
of certificate of authority.

Voluntary termination of certifica-
tion.

Subchapter III. Powers and Authority

of Universal Banks.

26-1401.07. Preexisting powers of universal

banks.
26-1401.08. Parity of powers of universal bank.
26-1401.09. Specific powers of universal banks.

Section

26-1401.10. Necessary or convenient powers.
26-1401.11. Reasonably related and incidental ac-
tivities.

Subchapter IV. Limitations, and Exceptions

to Limitations, on Powers of Universal

Banks.

26-1401.12. Limitations on loan power of univer-
sal banks.

26-1401.13. Limitations on investment powers of
universal bank.

26-1401.14. Exceptions to limitations on invest-
ment powers of universal banks.

26-1401.15. Limits on insurance and securities
powers of universal banks.

Subchapter V. Commissioner Possession,

Receivership, Conservatorship, and

Liquidation of Universal Banks

26-1401.16.

Liquidation of universal banks in
general.

21.6

BANKS AND OTHER FINANCIAL INSTITUTIONS

§ 26-1401.02

Section

26-1401.17. Commissioner taking possession of
universal banks.

26-1401.18. Resumption of business by a univer-
sal bank.

26-1401.19. Appointment of a receiver for a uni-
versal bank.

26-1401.20. Receiver duties and powers.

26-1401.21. Lien on property or assets; voidable
transfer.

26-1401.22. Maintenance and disposal of records
by receiver.

26-1401.23. Conservator; appointment; bond
and security; qualifications; ex-
penses.

Section

26-1401.24. Conservator; rights, powers, and

privileges.
26-1401.25. Deposits received while universal

bank in conservatorship.
26-1401.26. Authority of conservator to borrow

money; purpose.
26-1401.27. Termination of conservatorship.

Subchapter VI. Miscellaneous Provisions.

26-1401.28. Articles of incorporation and bylaws.
26-1401.29. Acquisitions, mergers and asset pur-
chases.
26-1401.30. Fees.
26-1401.31. Rulemaking.

Subchapter I. General Provisions.

§ 26-1401.01. Short title.

This chapter may be cited as the "Universal Bank Certification Act of 2000".
(June 9, 2001, D.C. Law 13-308, § 201, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

Law 13-308, the "21st Century Financial Mod-
ernization Act of 2000", was introduced in Council
and assigned Bill No. 13-867, which was referred
to the Committee on Economic Development, The
Bill was adopted on first and second readings on

§ 26-1401.02. Definitions.

For the purposes of this chapter, the term:

(1) "Affiliate" shall have the same meaning as set forth in § 26-551.02(1).

(2) "Appropriate federal financial institutions agency" shall have the same meaning as
set forth in § 26-551.02(2).

(3) "Bank holding company" shall have the same meaning as set forth in section 2(a) of
the Bank Holding Company Act of 1956, approved May 9, 1956 (70 Stat. 133; 12 U.S.C.
§ 1841(a)).

(4) "Capital" shall have the same meaning as set forth in § 26-551.02(6).

(5) "Capital accounts" means unimpaired capital stock, unimpaired surplus, and undivid-
ed profits or retained earnings of a financial institution.

(6) "Capital stock" means the aggregate of shares of nonwithdrawable capital stock
issued.

(7) "Commissioner" shall have the same meaning as set forth in § 26-551.02(7).

(8) "Community Reinvestment Act" means the Community Reinvestment Act of 1977,
approved October 12, 1977 (91 Stat. 1147; 12 U.S.C. § 2901 elseq.).

(9) "Department" shall have the same meaning as set forth in § 26-551.02(9).

(10) "Director" shall have the same meaning as set forth in § 26-551.02(10).

(11) "District" means the District of Columbia.

(12) "District of Columbia Banking Code" shall have the same meaning as set forth in
§ 26-551.01(14).

(13) "District savings institution" shall have the same meaning as set forth in
§ 26-551.02(15).

(14) "Equity securities" means a security representing an ownership interest in a
corporation. or independent agency head

(15) "Federal agency" shall have the same meaning as set forth in § 26-551.02(17).

217

§ 26-1401.02 BANKS AND OTHER FINANCIAL INSTITUTIONS

(16) "Federal financial institutions agency" means a federal government agency with
regulatory authority over a financial institution.

(17) "Federally chartered savings institutions" means a financial institution chartered by
the Office of Thrift Supervision, or a successor agency to the Office of Thrift Supervision.

(18) "Financial institution" shall have the same meaning as set forth in § 26-551.02(18).

(19) "Investment securities" means commercial paper, banker's acceptances, marketable
securities in the form of bonds, notes, and debentures, and similar instruments that are
regarded as investment securities.

(20) "Loan" includes a line of credit or other extension of credit.

(21) "Low-income" means an individual income that is less than 60% of the median
individual income for the Washington, D.C. metropolitan area according to the statistics of
the United States Department of Housing and Urban Development or a median family
income that is less than 60% of the median family income for the Washington, D.C.
metropolitan area according to the statistics of the United States Department of Housing
and Urban Development.

(22) "Moderate-income" means an individual income that is at least 60%, and less than
80%, of the median individual income for the Washington, D.C. metropolitan area according
to the statistics of the United States Department of Housing and Urban Development, or a
median family income that is at least 60%, and less than 80%, of the median family income
for the Washington, D.C. metropolitan area according to the statistics of the United States
Department of Housing and Urban Development.

(23) "National bank" means a financial institution chartered and supervised by the Office
of the Comptroller of the Currency, or a successor agency to the Office of the Comptroller
of the Currency.

(24) "Person" shall have the same meaning as set forth in § 26-551.02(21).

(25) "Savings institution" shall have the same meaning as set forth in § 26-551.02(23).

(26) "State bank" means a bank chartered and supervised by a financial institutions
agency of a state of the United States.

(27) "State financial institutions agency" means a government agency of a state of the
United States authorized to charter and supervise financial institutions.

(28) "Subsidiary" shall have the same meaning as set forth in § 26-551.02(24).

(29) "Superior Court" means the Superior Court of the District of Columbia.

(30) "Universal bank' 1 means a financial institution which is authorized by its articles of
incorporation or other organizational documents to act as a financial institution and is
certified under this chapter as a universal bank.

(June 9, 2001, D.C. Law 13-308, § 202, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(e), 51 DCR
2817.)

Historical and Statutory Notes

Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 15-166 rewrote pars. (7) and (9) which 15-381, February 27, 2004, 51 DCR 2653).

had read as follows: Legislative History of Laws

"(7) 'Commissioner' means the Commissioner of ^ T „ n nrtn , „ .,

the Department of Banking and Financial Institu- t For Law 1 ^ 08 ' see notes Mowing

tions." §26-1401.01.

"(9) 'Department' means the Department of For Law 15-166, see notes following

Banking and Financial Institutions." § 26-131.02.

Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2(e) of Consolidation of Financial Seivices

Subchapter II. Application and Certification as a Universal Bank.

§ 26-1401.03. Application to be certified as a universal bank; review and
approval or disapproval of application.

(a) A financial institution may apply to be certified as a universal bank by filing a written
application with the Commissioner. The application shall include such information as the

218

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.04

Commissioner may require by regulation. The application shall be on such forms, and shall be
prepared and filed in accordance with such procedures, as the Commissioner may prescribe
by regulation.

(b) An application submitted by a financial institution under subsection (a) of this section
shall be approved or disapproved in writing by the Commissioner within 90 days after its
submission to the Commissioner. The Commissioner and the financial institution may agree to
extend the application period for an additional 60 days.

(1) The financial institution is authorized under its articles of incorporation or other
organizational documents to act as financial institution;

(2) The financial institution is chartered or organized, regulated, supervised, and exam-
ined under the District of Columbia Banking Code and is under the authority and
supervision of the Commissioner;

(3) The financial institution is in good standing with the Department and there is no
investigatory or enforcement action pending against the financial institution by the Depart-
ment;

(4) The financial institution is in good standing with appropriate federal and state
financial institutions agencies and there is no investigatory or enforcement action pending
against the financial institution by an appropriate federal or state financial institutions
agency;

(5) The financial institution is well capitalized and has maintained a capital level prior to
certification as a universal bank as the Commissioner may require based on safety and
soundness consideration;

(6) The financial institution does not exhibit a combination of financial, managerial,
operational, and compliance weaknesses that are moderately severe or unsatisfactory, as
determined by the Commissioner, based upon the Commissioner's assessment of the
financial institution's capital adequacy, adequacy of liquidity, and sensitivity to market risk;

(7) The most recent evaluation prepared under the Community Reinvestment Act, if any,
demonstrates that the financial institution has received a rating of "outstanding" or
"satisfactory" in meeting the credit needs of its entire community, including low-income and
moderate-income neighborhoods, consistent with the safe and sound operation of the
financial institution;

(8) The most recent examination which the financial institution has received from its
appropriate federal financial institutions agency, if any, indicates that the financial institu-
tion is in compliance with applicable federal law and regulations;

(9) The financial institution agrees to comply with applicable regulations and rules
promulgated by the Commissioner and any lawful order of the Commissioner;

(10) The financial institution agrees to comply with any conditions imposed by the
Commissioner in connection with the approval of an application, including additional
requirements that the Commissioner determines are necessary for the protection of
depositors or shareholders of the financial institution or of the general public.

(11) The financial institution agrees to comply with any written agreement entered into
with the Commissioner in connection with the approval of an application;

(12) The Commissioner determines that it is reasonable to believe that the financial
institution will act in a safe and sound manner and maintain a safe and sound condition; and

(13) The Commissioner determines that certification of the financial institution as a
universal bank will serve the public interest.

(June 9, 2001, D.C. Law 13-308, § 203, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.04. Issuance of certificate of authority.

If the Commissioner approves the application of a financial institution to become certified
as a universal bank, the Commissioner shall issue to the financial institution a certificate of

219

§ 26-1401.04 BANKS AND OTHER FINANCIAL INSTITUTIONS

authority stating that the financial institution is certified as a universal bank under this

chapter.

(June 9, 2001, D.C. Law 13-308, § 204, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.05. Revocation or subsequent limitation of certificate of authority.

If a universal bank fails to maintain the standards and requirements of § 26-1401. 03(c), the
Commissioner shall, by order, revoke or limit the exercise of the powers of the universal
bank,

(June 9, 2001, D.C. Law 13-308, § 205, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.06. Voluntary termination of certification.

A financial institution that is certified as a universal bank under this chapter may elect to
terminate its certification by giving 60 days prior written notice of the termination to the
Commissioner. A termination under this section shall be effective only with the written
approval of the Commissioner. A financial institution shall, as a condition to a termination
under this section, terminate its exercise of all powers granted under this chapter before the
termination of the certification. The Commissioner's written approval of a financial institu-
tion's termination under this section shall be void if the financial institution fails to satisfy the
condition to termination under this section.
(June 9, 2001, D.C. Law 13-308, § 206, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

Subchapter III. Powers and Authority of Universal Banks.

§ 26-1401.07. Preexisting powers of universal banks.

A universal bank may exercise any power that it was authorized to exercise under the
District of Columbia Banking Code before its certification as a universal bank.
(June 9, 2001, D.C. Law 13-308, § 207, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.08. Parity of powers of universal bank.

(a) The Commissioner may authorize a universal bank to exercise a power that may be
exercised by any other state bank, state or federally chartered savings bank, state or
federally chartered savings and loan association, or federally charted national bank.

(b)(1) A universal bank shall file with the Commissioner a written request to exercise a
power under subsection (a) of this section. Within 60 days after receiving a request under this
subsection, the Commissioner shall approve the request if the Commissioner determines that:

220

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.09

(A) The power requested by the universal bank may be exercised by a state bank,
state or federally chartered savings bank, a state or federally chartered savings and loan
association, or a federally charted national bank; and

(B) The universal bank will exercise the power requested in a safe and sound manner.
(2) The Department and the universal bank may agree to extend the 60-day period

under paragraph (1) of this subsection for an additional 60 days.

(c) A universal bank shall exercise a power authorized under this section only through a
subsidiary of the universal bank, with the appropriate safeguards to limit the risk exposure of
the universal bank and to protect the banking customers of the universal bank.
(June 9, 2001, D.C. Law 13-308, § 208, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.09. Specific powers of universal banks.

(a) Subject to applicable laws, regulations, and any required approval of the Commissioner
or other regulators, a universal bank may:

(1) Establish eligibility requirements and the types and terms of deposits that the
universal bank may solicit and accept;

(2) Make, sell, purchase, arrange, participate in, invest in, or otherwise deal in a loan or
extension of credit for any purpose and invest in debt instruments or debt securities ("make
a loan"), subject to § 26-1401.12;

(3) Acquire an equity interest or other form of interest as security in a project funded
through a loan made under paragraph (2) of this section, subject to § 26-1401.12;

(4) Acquire an equity interest in a profit-participation project, including a project funded
through a loan from the universal bank, subject to § 26-1401.13;

(5) Purchase, sell, underwrite,- and hold investment securities, consistent with safe and
sound banking practices, subject to § 26-1401.13;

(6) Purchase, sell, underwrite, and hold equity securities, consistent with safe and sound
banking practices, subject to § 26-1401.13;

(7) Invest in housing projects, as defined in § 26-1401.13, with the prior written approval
of the Commissioner, subject to § 26-1401.13;

(8) Purchase, sell, and invest in such other investments as the Commissioner, by
regulation, may provide, consist with safe and sound practices, subject to § 26-1401.13;

(9) Buy and sell securities as an agent or broker, subject to § 26-1401.15;

(10) Buy and sell real estate and interests in real estate as an agent or broker;

(11) Manage real estate and other property;

(12) Sell annuities, subject to § 26-1401.15;

(13) Sell life insurance, accident insurance, health insurance, property insurance, casualty
insurance, and any other form of insurance, subject to § 26-1401.15;

(14) Act as a broker-dealer, securities agent, investment adviser, investment adviser
representative, insurance agent, or insurance broker, if otherwise qualified, upon obtaining
a license from the Department of Insurance and Securities Regulation, subject to
§ 26-1401.15;

(15) Buy and sell commodities as a principal, agent, or broker, with the prior written
approval of the Commissioner, subject to § 26-1401.15;

(16) Underwrite and distribute annuities, subject to § 26-1401.15, with the prior written
approval of the Commissioner and the appropriate federal financial institutions agency of
the universal bank; provided, that the underwriting and distribution shall be conducted only
through a non-depository financial institution affiliate of the universal bank unless federal
law T permits the underwriting and distribution to be conducted through a subsidiary of the
financial institution;

(17) Underwrite and distribute life insurance, accident insurance, health insurance,
property insurance, casualty insurance, and any other form of insurance, with the prior

221

§ 26-1401.09

BANKS AND OTHER FINANCIAL INSTITUTIONS

written approval of the Commissioner, subject to § 26-1401.15; provided, that the under-
writing and distribution shall be conducted only through a non-depository financial institu-
tion affiliate of the universal bank unless federal law permits the underwriting and
distribution to be conducted through a subsidiary of the financial institution;

(18) Underwrite, deal in, or make a market in securities, with the prior written approval
of the Commissioner, subject to § 26-1401.15; provided, that the underwriting, dealing,
market-making shall be conducted only through a subsidiary of the universal bank; and

(19) Distribute shares in investment companies, with the prior written approval of the
Commissioner, subject to § 26-1401.15; provided, that the distribution shall only be
conducted through a subsidiary of the universal bank.

(b) With the approval of the Commissioner, a universal bank may securitize its assets for
sale to the public. The Commissioner may establish procedures governing the exercise of
authority granted under this subsection.

(June 9, 2001, D.C. Law 13-308, § 209, 48 DCR 3244; June 11, 2004, D.C. Law 15-166, § 2(f), 51 DCR
2817; Apr. 13, 2005, D.C. Law 15-354, § 35(d), 52 DCR 2638.)

Historical and Statutory Notes

Effect of Amendments

D.C. Law 15-166, in the introductory language
of subsec. (a), deleted "of the Department of Insur-
ance and Securities Regulation" following "Com-
missioner".

D.C. Law 15-354, in subsec. (a)(18), validated a
previously made technical correction.
Emergency Act Amendments

For temporary (90 day) amendment of section,
see § 2(f) of Consolidation of Financial Services

Emergency Amendment Act of 2004 (D.C.
15-381, February 27, 2004, 51 DCR 2653).

Legislative History of Laws

Act

For Law
§ 26-1401.01.

For Law
§ 26-131.02.

For Law
§ 26-551.05.

13-30

see notes following

15-166, see notes following
15-354, see notes following

§ 26-1401.10. Necessary or convenient powers.

Unless otherwise, prohibited by law or regulation, a universal bank may exercise all powers
necessary or convenient to effect the purposes for which the universal bank is organized or to
further a business, activity, or operation in which the universal bank is lawfully engaged. The
Commissioner may, by rule or order, establish that certain powers shall not be considered
necessary or convenient to effect the purposes for which a universal bank is organized or to
further a business, activity, or operation in which a universal bank is lawfully engaged.
(June 9, 2001, D.C. Law 13-308, § 210, 48 DCR 3244.)

Legislative History of Laws

For Law 13-308, see
§ 26-1401.01.

Historical and Statutory Notes

notes following

§ 26-1401.11. Reasonably related and incidental activities.

(a) Subject to any applicable District or federal licensing or regulatory requirements, a
universal bank may engage, directly or through a subsidiary, in activities that are reasonably
related or incident to the lawful and authorized purposes, activities, operations, or business of
the universal bank.

(b) The following activities shall be considered reasonably related or incident to the lawful
and authorized purposes, activities, operations, or business of a universal bank:

(1) An activity that a statute or regulation authorizes a universal bank to engage in;

(2) An activity permitted under the Bank Holding Company Act;

(3) Business services;

(4) Data processing;

(5) E -commerce services, including web hosting, Internet service provider services, and
e-commerce logistics and support;

(6) Courier and messenger services;

222

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.11

(7) Credit related activities;

(8) Consumer services;

(9) Real estate-related services, including real estate brokerage services;

(10) Insurance and related sendees (other than insurance underwriting);

(11) Securities brokerage;

(12) Investment advice;

(13) Securities and bond underwriting;

(14) Mutual fund activities;

(15) Management consulting;

(16) Tax planning and preparation;

(17) Community development and charitable activities; and

(18) Debt cancellation contracts.

(c) The Commissioner may, by rule, prescribe additional activities that shall be considered
reasonably related or incident to the purposes, activities, operations, or business of a
universal bank.

(d)(1) If the activity is not described in subsection (a) or (b) of this section, a universal bank
shall provide written notice to the Commissioner of the universal bank's intent to engage in
an activity under this section at least 60 days before the universal bank intends to engage in
the activity.

(2) The Commissioner may deny or revoke the authority of a universal bank to engage in
an activity for which notice was provided under paragraph (1) of this subsection if the
Commissioner determines that:

(A) The activity is not an activity reasonably related or incident to the purposes,
activities, operations, or business of a universal bank;

(B) The universal bank is not well-capitalized;

(D) The universal bank does not have satisfactory management expertise to engage in
the activity for which notice was provided.

(e) The Commissioner shall take the following factors into account when determining
whether an activity is reasonably related or incidental to the purposes, activities, operations,
or business of a universal bank:

(1) Domestic and international competition for banking and other financial services;

(2) The convergence of financial institutions and financial products;

(3) Changes, or reasonably expected changes, in the marketplace in which financial
institutions compete;

(4) Changes, or reasonably expected changes, in the technology for delivering banking or
related financial services;

(5) Whether such activity is necessary or appropriate to allow universal banks to:

(A) Compete effectively with a company seeking to provide banking or related
financial services in the United States;

(B) Use an available or emerging technology in providing financial services, including
an application necessary to protect the security or efficacy of systems for the transmis-
sion of data related to financial transactions; and

(6) Whether the activity may pose risks to the continued safety and soundness of a
universal bank.

(f) The Commissioner may impose conditions upon a universal bank's engagement in an
activity that is reasonably related or incidental to the purposes, activities, operations, or
business of a universal bank.

(June 9, 2001, D.C. Law 13-308, § 211, 48 DCR 3244.)

223

§ 26-1401.11 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

Subchapter IV. Limitations, and Exceptions to
Limitations, on Powers of Universal Banks.

§ 26-1401.12. Limitations on loan power of universal banks.

(a) A universal bank shall not make loans under § 26-140 1.09(a) (2) through the universal
bank, or a subsidiary of the universal bank, in an aggregate amount that exceeds 20% of the
universal bank's capital; provided, that:

(1) For the purposes of computing this limitation, loans made to a municipal corporation
shall not be included; and

(2) A universal bank may make loans under § 26-1401. 09(a)(2) through the universal
bank, or a subsidiary of the universal bank, in an aggregate amount not to exceed 50% of
the universal bank's capital if the loans made under § 26-1401.09(a)(2) are limited to a
liability in the form of a note or bond that:

(A) Is secured by not less than an equal amount of bonds or notes of the United States
issued since April 24, 1917 or in certificates of indebtedness of the United States;

(B) Is secured or covered by guarantees, commitments, or agreements to take over or
purchase the note or bond, and the guarantee, commitment, or agreement is made by a
Federal Reserve Bank, the Small Business Administration, the Department of Defense,
or the Federal Maritime Commission; or

(b) A loan made under § 26-1401. 09(a)(2) shall require the prior approval of the board of
directors or other governing board of the universal bank or its subsidiary.

(c) An equity interest or other form of interest taken as security in a project funded
through a loan made under § 26-1401. 09(a)(3) shall require the prior approval of the board of
directors or other governing board of the universal bank or its subsidiary.

(d) The Commissioner may suspend a universal bank's authority under § 26-1401.09(a)(2)
or (3) if the Commissioner determines that the universal bank is not exercising, or will not
exercise, authority under § 26-1401. 09(a)(2) or (3) in a safe and sound manner or that the
condition of the universal bank is not, or will not be, safe and sound. In making a
determination to suspend a universal bank's authority under this subsection, the Commission-
er shall consider the universal bank's capital adequacy, asset quality, earnings quantity,
earnings quality, adequacy of liquidity, and sensitivity to market risk; the ability of the
management of the universal bank; and any other factor the Commissioner determines is
appropriate. If the Commissioner suspends the authority of a universal bank under this
subsection, the Commissioner may specify how the universal bank or its subsidiary shall treat
an outstanding loan.

(e) A universal bank shall not purchase foreign bonds unless the Commissioner promul-
gates a rule authorizing the purchase of foreign bonds by universal banks; provided, that a
universal bank may purchase a general obligation bond issued by a foreign national govern-
ment if the bond is payable in United States funds. The Commissioner shall not promulgate a
rule under this subsection authorizing a universal bank to invest in foreign bonds issued by a
single issuer in an aggregate amount that exceeds 10% of the universal bank's capital.

(f) A universal bank shall not consider any health information obtained from the records of
an affiliate of the universal bank that is engaged in the business of insurance in the universal
bank's determination of whether to make a loan under § 26-1401.09(a)(2) or in the determina-
tion of whether to make any other loan, unless the person to whom the health information
relates consents to the consideration of the health information in the universal bank's
determination of whether to make the loan.

224

BANKS AND OTHER FINANCIAL INSTITUTIONS §'26-1401.13

(g) A universal bank shall not loan any part of its capital, surplus, or deposits on its own
capital stock, notes, or debentures as collateral security; provided, that a universal bank may
make a loan secured by its own capital stock, notes, or debentures to the same extent that the
universal bank may make a loan secured by the capital stock, notes, and debentures of a
holding company for the universal bank.

(h) The restrictions and limits in subsections (a), (e), and (f) of this section shall not apply
to a liability:

(1) That is secured by not less than an equal dollar amount of direct obligations of the
United States which will mature not more than 18 months after the date on which the
liability is incurred;

(2) That is a direct obligation of the United States, the District, or a federal or District
agency and that is fully and unconditionally guaranteed by the United States or the
District;

(3) In the form of a note, debenture, or certificate of interest of the Commodity Credit
Corporation; or

(4) Created by the discounting of bills of exchange drawn in good faith against actually
existing values or the discounting of commercial or business paper actually owned by the
person negotiating the commercial or business paper.

(June 9, 2001, D.C. Law 13-308, § 212, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.13. Limitations on investment powers of universal bank.

(a)(1) A universal bank shall not acquire an equity interest in a profit-participation project
under § 26-1401. 09(a)(4) in an aggregate amount that exceeds 20% of the universal bank's
capital; provided, that an investment described in § 26-1401.14 shall not be included computa-
tion of this limitation. The Commissioner may suspend a universal bank's authority under
§ 26-1 40 1.09(a) (4) if the Commissioner determines that the universal bank is not exercising
this authority under § 26-1401. 09(a)(4), will not exercise the authority in a safe and sound
manner, or that the condition of the universal bank is not, or will not be, safe and sound. In
making a determination to suspend a universal bank's authority under this subsection, the
Commissioner shall consider the universal bank's capital adequacy, asset quality, earnings
quantity, earnings quality, adequacy of liquidity, and sensitivity to market risk; the ability of
the universal bank's management; and any other factor the Commissioner determines is
appropriate. If the Commissioner suspends the authority of a universal bank under this
subsection, the Commissioner may specify how the universal bank or its subsidiary shall treat
an outstanding investment.

(2) The authority granted to a universal bank under § 26-1401. 09(a)(4) shall not author-
ize a universal bank, or a subsidiary of the universal bank, to underwrite insurance.

(b) A universal bank may purchase, sell, underwrite, and hold investment securities,
consistent with safe and sound banking practices, under § 26-1401. 09(a)(5) in an amount not
to exceed 100% of the universal bank's capital; provided, that:

(1) A universal bank shall not invest an aggregate amount that exceeds 20% of the
universal bank's capital in the investment securities of any one obligor or issuer; provided
further, that an investment described in § 26-1401.14 shall not be included in the
computation of this 20% limitation; and

(2) The underwriting activities of the universal bank shall be conducted through a
subsidiary of the universal bank, with the appropriate safeguards to limit the risk exposure
of the universal bank and to protect the banking customers of the universal bank;

(c)(1) A universal bank shall not purchase, sell, underwrite,- or hold equity securities under
§ 26-1401. 09(a)(6) in an aggregate amount that exceeds 20% of the universal bank's capital;
provided, that:

225

§■26-1401.13 BANKS AND OTHER FINANCIAL INSTITUTIONS

(A) The Commissioner may authorize a universal bank, by written order, to purchase,
sell, underwrite, or hold equity securities under § 26-1401. 09(a)(6) in an aggregate
amount that exceeds 20% of the universal bank's capital if such greater amount is
consistent with safe and sound practices and the safe and sound operation and condition
of the universal bank; and

(B) An investment described in § 26-1401.14 shall not be included in the computation
of the 20% limitation.

(2) The underwriting activities of universal bank under § 26-1401. 09(a)(6) shall be
conducted through a subsidiary of the universal bank, with the appropriate safeguards to
limit the risk exposure of the universal bank and to protect the banking customers of the
universal bank.

(d) A universal bank may purchase, sell, underwrite, and hold investment securities or
equity securities in other financial institutions under § 26-1401. 09(a)(5) or (6); provided, that
a universal bank shall not purchase and hold stock in a bank chartered under the District of
Columbia Banking Code, a national bank, or in a holding company wholly owning a District-
chartered or national bank without the authorization of the Commissioner; provided further,
that the Commissioner shall not authorize a universal bank to purchase and hold stock under
this subsection in an amount that exceeds 10% of the universal bank's capital.

(e)(1) A universal bank may invest in housing projects under § 26-1401. 09(a)(7); provided,
that: (1) the aggregate investment in any one housing project shall not exceed 15% of the
universal bank's capital and the aggregate investment in all housing projects shall not exceed
50% of the universal bank's capital; and (2) a universal bank shall not invest in a housing
project under § 26-1401. 09(a)(7) unless the universal bank is in compliance with the capital
requirements established by the Commissioner and with the capital maintenance require-
ments of the universal bank's deposit insurance corporation. An investment described in
§ 26-1401.14 shall not be included in the computation of the 15% and 50% limitations.

(2) For the purposes of this subsection and of § 26-1401.09(a)(7), the term "housing
project" shall mean the development or redevelopment of home sites or housing for sale or
rental, including projects for the reconstruction, rehabilitation, or rebuilding of residential
properties to meet the minimum standards of health and occupancy, the provision of
accommodations for retail stores and other community services that are reasonably related,
or incident, to the housing project, and the stock of a corporation that owns a housing
project and that is wholly owned by one or more financial institutions.

(f) Except as provided in subsections (b)(1) and (b)(2) of this section, a universal bank may
make an investment under § 26-1401 .09(a)(3) through (8), directly or through a subsidiary,
unless the Commissioner determines that such investment shall be made through a subsidiary
or with appropriate safeguards to limit the risk exposure of the universal bank.

(g)(1) A universal bank shall not purchase or hold more than 10% of its own capital stock,
notes, or debentures; provided that:

(A) A universal bank may purchase or hold more than 10% of its own capital stock,
notes, or debentures, if approved by the Commissioner consistent with safe and sound
practices; and

(B) A universal bank may purchase or hold more than 10% of its own capital stock,
notes, or debentures if the purchase is necessary to prevent loss upon a debt previously
contracted in good faith; provided further, that:

(i) The universal bank shall sell or cancel the stock, notes, or debentures held or
purchased under this subparagraph within 12 months of acquisition; and

(ii) Stocks, notes, or debentures held or purchased under this subparagraph shall

not be held by the universal bank for more than 6 months if the stock, notes, or

debentures can be sold for the amount of the claim of the universal bank against the

holder of the debt previously contracted.

(2) Cancellation of stock, notes, or debentures under paragraph (1)(B) of this subsection

shall reduce the amount of the universal bank's capital stock, notes, or debentures. If the

reduction reduces the universal bank's capital below the minimum level required by the

226

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.15

Commissioner, the universal bank shall increase its capital to the amount required by the
Commissioner.
(June 9, 2001, D.C. Law 13-308, § 213, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.14. Exceptions to limitations on investment powers of universal
banks.

The percentage limitations in § 26-1401.13 shall not apply to, and a universal bank may
invest without limitation in, any of the following:

(1) Stocks or obligations of a corporation organized for business development by the
District, the United States, or a District or federal agency;

(2) Obligations of an urban renewal investment corporation organized under the laws of
the District or of the United States;

(3) An equity interest in an insurance company or an insurance holding company
organized to provide insurance for universal banks and for persons affiliated with universal
banks to the extent that ownership of the equity interest is a prerequisite to obtaining
directors' and officers' insurance or blanket bond insurance for the universal bank through
the insurance company;

(4) Shares of stock, whether purchased or otherwise acquired, in a corporation acquiring,
placing, and operating remote service units or bank communications terminals;

(5) Equity, debt securities, or debt instruments of a service corporation subsidiary of the
universal bank;

(6) Advances of federal funds;

(7) Financial futures transactions, financial options transactions, forward commitments,
or other financial products for the purpose of reducing, hedging, or otherwise managing the
universal bank's interest rate risk exposure; provided, that the prior written approval of the
Commissioner shall be required to make the investments described in this paragraph;

(8) A subsidiary of the universal bank organized to exercise corporate fiduciary powers
under this chapter;

(9) An agricultural credit corporation; provided, that the universal bank shall not own
more than 80% of the stock of an agricultural credit corporation and shall not invest more
than 20% of the universal bank's capital in agricultural credit corporations;

(10) Deposit accounts or insured obligations of a financial institution, the accounts of
which are insured by a deposit insurance corporation;

(11) Obligations of, or obligations that are fully guaranteed by, the United States;

(12) Stocks or obligations of any Federal Reserve Bank, Federal Home Loan Bank, the
Student Loan Marketing Association, the Government National Mortgage Association, the
Federal National Mortgage Association, the Federal Home Loan Mortgage Corporation, or
the Federal Deposit Insurance Corporation; or

(13) Any other investment authorized by the Commissioner.
(June 9, 2001, D.C. Law 13-308, § 214, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.15. Limits on insurance and securities powers of universal banks.

(a)(1) If a universal bank is permitted to engage in the business of insurance or securities
under any authority granted by this chapter, the insurance and securities activities of the
universal bank shall be subject to the regulation and supervision of the Department and

227

§ 26-1401.15 BANKS AND OTHER FINANCIAL INSTITUTIONS

appropriate federal agencies and shall be carried out under all laws, rules, and regulations
applicable to insurance and securities; provided, that the Commissioner may exempt a
universal bank from a provision of this chapter, or any rule or regulation promulgated under
this chapter, which has been preempted by federal law, rule, or regulation.

(2) The Department shall maintain functional regulatory authority over the insurance
and securities activities of the insurance or securities subsidiary or holding company
affiliate of a universal bank. The regulatory authority of the Department shall include
reviewing and taking necessary actions, including approval and disapproval, on applications
and other documents or reports concerning a proposed acquisition of, or a change or
continuation of control of, an insurer domiciled in the District of Columbia.

(b)(1) A universal bank shall disclose, or cause to be disclosed, to purchasers of,
prospective purchasers of, and persons solicited to purchase, an insurance policy of the
universal bank that the insurance offered or sold is not a deposit, is not insured by the federal
deposit insurance corporation, and is not guaranteed by the universal bank; provided, that
this disclosure requirement shall not apply to the solicitation or sale of a credit unemployment
insurance policy, group credit life insurance policy, group credit health insurance policy,
group credit accident insurance policy, or group credit health and accident insurance policy,
or a similar group credit insurance policy covering the person of the insured.

(2) A person soliciting the purchase of, or selling, insurance on the premises of a
universal bank shall disclose, or cause to be disclosed, to purchasers of, prospective
purchasers of, and persons solicited to purchase, an insurance policy of the universal bank
that the insurance offered or sold is not a deposit, is not insured by the federal deposit
insurance corporation, and is not guaranteed by the universal bank; provided, that this
disclosure requirement shall not apply to the solicitation or sale of a credit unemployment
insurance policy, group credit life insurance policy, group credit health insurance policy,
group credit accident insurance policy, or group credit health and accident insurance policy,
or a similar group credit insurance policy covering the person of the insured.

(3) A disclosure required under paragraph (1) or (2) of this subsection shall be made in
writing and in clear and concise language.

(c) If a person obtains insurance and credit from a universal bank, the expense of the
credit and insurance transactions shall be disclosed in separate contractual provisions, and the
expense of insurance premiums shall not be included in the primary credit transactions
without the express written consent of the person; provided, that this subsection shall not
apply if the insurance policy being obtained is a Hood insurance policy, a credit unemployment
insurance policy, a group credit life insurance policy, a group credit health insurance policy,
group credit accident insurance policy, or a group credit health and accident insurance policy,
or a similar group credit insurance policy covering the person of the insured,

(d)(1) A universal banks shall not condition the making of a loan, including a loan under
§ 26-1401.09(a)(2), the lease or sale of property of any kind, or the furnishing of any services
to a customer on the requirement that the customer obtain insurance from the universal bank,
an affiliate or subsidiary of the universal bank, or a particular insurer, agent, or broker. A
universal bank shall not fix or vary the consideration charged to a customer for the making of
a loan, including a loan under § 26-1401.09(a)(2), the lease or sale of property of any kind, or
the furnishing of any services based on whether the customer obtains insurance from the
universal bank, an affiliate or subsidiary of the universal bank, or a particular insurer, agent,
or broker.

(2) The prohibitions under paragraph (1) of this subsection shall not prevent a universal
bank from informing a person that insurance is required to obtain a loan or credit, that loan
or credit approval is contingent upon the person's procurement of acceptable insurance, or
that insurance is available from the universal bank; provided, that the universal bank shall
also inform the person in writing that his or her choice of insurance provider shall not
affect the universal bank's credit decision or credit terms; provided further, that the
disclosure shall be given again before or at the time that the universal bank, or the person
selling or soliciting the purchase of insurance on the premises of the universal bank, solicits
the purchase of insurance from a customer who has applied for a loan or extension of
credit.

228

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.16

(e)(1) A universal bank may engage in an. activity under § 26-1401. 09(a)(6) through (19)
directly or indirectly through a subsidiary, unless the Commissioner determines that the
activity shall be conducted through a subsidiary; provided that:

(A) An underwriting or distribution of annuities under § 26-1401. 09(a)(16) shall be
conducted only through a non-depository financial institution affiliate of the universal
bank unless federal law permits the underwriting and distribution to be conducted
through a subsidiary of the financial institution;

(B) An underwriting or distribution of life insurance, accident insurance, health
insurance, property insurance, casualty insurance, or any other form of insurance under
§ 26-1401. 09(a)(17) shall be conducted only through a non-depository financial institution
affiliate of the universal bank unless federal law permits the underwriting and distribu-
tion to be conducted in a subsidiary of the financial institution;

(C) An .-.underwriting,., dealing, or market-making in securities under
§ 26-1401. 09(a)(18) shall be conducted only in a subsidiary of the universal bank; and

(D) A distribution of shares in investment companies under § 26-1401. 09(a)(19) shall
only be conducted through a subsidiary of the universal bank.

(2) The Commissioner may require that a subsidiary or affiliate of a universal bank
engaged in an activity under § 26-1401. 09(a)(6) through (19) implement and maintain
appropriate safeguards to limit the risk exposure of the universal bank.

(f) The investment in a subsidiary that engages in an activity under § 26-1401.09(a)(6)
through (19) shall not exceed 20% of the universal bank's capital; provided, that the
Commissioner may authorize a higher percentage, by written order, if the percentage is
consistent with safe and sound practices and the safe and sound operation and condition of
the universal bank.

(g) The aggregate investment in all subsidiaries that engage in an activity under
§ 26-1401. 09(a)(6) through (19) shall not exceed 50% of the universal bank's capital; provided,
that the Commissioner may authorize a higher percentage, by written order, if the percentage
is consistent with safe and sound practices and the safe and sound operation and condition of
the universal bank.

(h) A subsidiary that engages in an activity under § 26-1401.09(a)(6) through (19) may be
owned jointly with one or more persons, including universal banks.

(June 9, 2001, D.C. Law 13-308, § 215, 48 DCR 3244; Oct. 19, 2002, D.C. Law 14-213, § 18(f), 49 DCR
8140; June 11, 2004, D.C. Law 15-166, § 2(g), 51 DCR 2817.)

Historical and Statutory Notes

Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 14-213, in subsec. (a)(1), validated a 15-381, February 27, 2004, 51 DCR 2653).

previously made technical correction. Legislative History of Laws
D.C. Law 15-166, in subsec. (a), deleted "of _ T ,„ _.„„ , „ ,,

Insurance and Securities Regulation" Mowing F ? r Law 13 - 308 < see notes ™™™g

"Department", and deleted ", with the approval of § ^6 1401.01.

the Commissioner of the Department of Insurance For Law 14-213, see notes following

and Securities Regulation," following "Commis- § 26-131 02.

sioner".

Emergency Act Amendments .ofio-^T 1 ^ 166 ' ** **** f ° ll0Wing

For temporary (90 day) amendment of section,
see § 2(g) of Consolidation of Financial Sendees

26-131.02.

Subchapter V. Commissioner Possession, Receivership, Conservatorship,
and Liquidation of Universal Banks

§ 26-1401.16. Liquidation of universal banks in general.

A universal bank shall not be liquidated except as provided by this chapter or in accordance
with the order of a court of competent jurisdiction.

(June 9, 2001, D.C, Law 13-308, § 216, 48 DCR 3244.)

229

§ 26-1401.16 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.17. Commissioner taking possession of universal banks.

(a) Subject to § 26-1401.15 as it relates to the functional regulatory authority of the
Commissioner with respect to the liquidation or rehabilitation of an insurance subsidiary or
holding company affiliate, the Commissioner may take possession of the business and
property of a universal bank if the Commissioner has determined that one or more of the
events described in subsection (b) of this section has occurred.

(b) The Commissioner may take possession of the properties or business of a universal
bank under subsection (a) of this section if the universal bank:

(2) Is conducting its business in an unauthorized or unsafe or unsound manner;

(3) Is in an unsafe and unsound condition to transact its business;

(4) Has an impairment of its capital;

(5) Has suspended payment of its obligations;

(6) Has neglected or refused to comply with the terms of a duly issued order of the
Commissioner;

(7) Has refused, upon proper demand, to submit its records and affairs for inspection to
an examiner of the Department;

(8) Has refused to be examined upon oath regarding its affairs; or

(9) Has neglected, refused or failed to take or continue proceedings for voluntary
liquidation in accordance with any of the provisions of this chapter.

(c) If the Commissioner takes possession of the property or business of a universal bank
under this section, the Commissioner shall inform the universal bank of the universal bank's
right to seek review of the Commissioner's action under subsection (e) of this section.

(d) The Commissioner may maintain possession of the property or business of a universal
bank until:

(1) The affairs of the universal bank are finally liquidated;

(2) The universal bank, with the written approval of the Commissioner, voluntarily winds
up its affairs; or

(3) The Commissioner authorizes the universal bank to resume business under
§ 26-1401.18.

(e) Within 10 days after the Commissioner takes possession of the property or business of
a universal bank under this section, the universal bank may apply to the Superior Court for
an order requiring the Commissioner to show cause why the Commissioner should not be
enjoined from continuing his or her possession of the property or business. The Superior
Court may, upon good cause shown, direct the Commissioner to surrender possession of some
or all of the business or property of the universal bank or direct the Commissioner to take, or
refrain from taking, any action.

(f) In addition to the authority granted under this section, the Commissioner may appoint a
receiver for the universal bank as provided in § 26-1401.19.

(June 9, 2001, D.C. Law 13-308, § 217, 48 DCR 3244; June 11, 2004. D.C. Law 15-166, § 2(h), 51 DCR

2817.)

230

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.19

Historical and Statutory Notes

Effect of Amendments Emergency Amendment Act of 2004 (D.C. Act

D.C. Law 15-166, in subsec. (a), deleted "of the 15-381, February 27, 2004, 51 DCR 2653).

Department of Insurance and Securities Regula- Legislative History of Laws

tion" following "authority of the Commissioner". p or L aw 13-308, see notes following

Emergency Act Amendments §26-1401.01.

For temporary (90 day) amendment of section, For Law 15-166, see notes following

see § 2(h) of Consolidation of Financial Services § 26-131.02.

§ 26-1401.18. Resumption of business by a universal bank.

A universal bank of which the Commissioner takes possession or which is operating under
restrictions imposed by the Commissioner may be permitted by the Commissioner to resume
business in accordance with the provisions of this chapter and subject to such conditions as
may be imposed by the Commissioner.
(June 9, 2001, D.C. Law 13-308, § 218, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.19. Appointment of a receiver for a universal bank.

(a) The Commissioner may petition the Superior Court to appoint a receiver for a universal
bank if there is a reasonable basis to believe the universal bank:

(3) Is conducting its business in an unauthorized, unsafe, or unsound manner;

(4) Is in an unsafe and unsound condition;

(5) Has an impairment of its capital;

(6) Has suspended payment of its obligations;

(7) Has refused, upon proper demand, to submit its records and affairs for inspection to
an examiner of the Department;

(8) Has refused to be examined upon oath regarding its affairs; or

(9) Has neglected, refused, or failed to take or continue proceedings for voluntary
liquidation in accordance with any of the provisions of this chapter.

(b) If the Commissioner petitions the Superior Court to appoint a receiver for a universal
bank, the Commissioner shall request that the Superior Court appoint the Federal Deposit
Insurance Corporation as the receiver if any of the deposits in the universal bank are insured
by the Federal Deposit Insurance Corporation.

(c) The Superior Court may act upon a petition by the Commissioner for the appointment
of a receiver immediately and without notice to any person. The Superior Court may appoint
a receiver if the Superior Court determines that a condition set forth in subsection (a) of this
section exists and that the bank is operating, or may operate, in an unsafe or unsound
manner. The Superior Court may also issue an injunction to require a universal bank to
correct any condition set forth in subsection (a) of this section, notwithstanding whether the
bank is operating, or may operate, in an unsafe or unsound manner. If the Superior Court
appoints a receiver and, after the appointment of a receiver, it appears to the Superior Court

231

§ 26-1401.19 BANKS AND OTHER FINANCIAL INSTITUTIONS

that reasons for receivership do not, or no longer, exist, the Superior Court shall dissolve the
receivership and terminate any pending proceedings.

(d) Unless otherwise provided by law, a receiver, other than a receiver who is an employee
of the Department and acting in his or her official capacity, shall post a bond in an amount to
be determined by the Superior Court.

(e) The receiver shall, on a regular basis, report to the Commissioner regarding all matters
involving the receivership.

(f) If a universal bank has been closed and placed in receivership, and the Federal Deposit
Insurance Corporation pays, or makes available for payment, the insured deposit liabilities of
the closed bank, the rights of the Federal Deposit Insurance Corporation, whether or not the
Federal Deposit Insurance Corporation is the receiver of the bank, shall be subrogated to all
of the rights of the owners of the deposits against the closed universal bank in the same
manner and to the same extent as subrogation of the Federal Deposit Insurance Corporation
is provided for in section 11(g) of the Federal Deposit Insurance Act, approved September 21,
1950 (64 Stat. 884; 12 U.S.C. § 1821(g)).

(June 9, 2001, D.C. Law 13-308, § 219, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.20. Receiver duties and powers.

(a) Subject to Superior Court approval, a receiver shall:

(1) Take possession of the books, records, and assets of the universal bank and collect all
debts, dues, and claims belonging to the universal bank;

(2) Sue, defend, compromise, arbitrate, or otherwise settle all claims involving the
universal bank;

(3) Sell all real and personal property;

(4) Exercise all fiduciary functions of the universal bank;

(5) Pay all administrative expenses of the receivership, which expenses shall be a first
charge upon the assets of the universal bank and shall be fully paid before a final
distribution or payment of dividends to creditors or shareholders;

(6) Pay, ratably, all debts of the universal bank; provided, that debts not exceeding $500
may be paid in full, but the holders of such debt shall not be entitled to interest on the
debt;

(7) Repay, ratably, any amount paid in by a shareholder by reason of an assessment
made upon the stock of the universal bank by the Department in accordance with this
chapter;

(8) Pay, ratably, to the shareholders of the universal bank, in proportion to the number
of shares held and owned by each, the balance of the net assets of the universal bank after
payment or provision for payments as provided in this section;

(9) Have all the powers of the directors, officers, and shareholders of the universal bank
as necessary to support an action taken on behalf of the universal bank; and

(10) Hold title to all the bank's property, contracts, and rights of action.

(b) Subject to Superior Court approval, a receiver may:

(1) Borrow money as necessary or expedient in aiding the liquidation of the universal
bank and secure the borrowed money by the pledge, hypothecation, or mortgage of the
assets of the bank;

232

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.21

(3) Exercise any other power and duty authorized by the Superior Court.

(June 9, 2001, D.C. Law 13-308, § 220, 48 DCR 3244; Oct. 19, 2002, D.C. Law 14-213, § 18(g), 49 DCR
8140.

Historical and Statutory Notes

Effect of Amendments For Law 14-213, see notes -following

D.C. Law 14-213, in subsec. (a)(7), validated a §26-131.02.
previously made technical correction.
Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.21. Lien on property or assets; voidable transfer.

(a) Except as provided in subsection (c) of this section, the transfer of, or a lien on, the
property or assets of the universal bank shall be voidable by the receiver if the transfer or
lien was:

(1) Made or created within one year before the date the universal bank is ordered into
receivership if the receiving transferee or lien holder was at the time an affiliate, officer,
director, employee, or principal shareholder of the universal bank or an affiliate of the
universal bank;

(2) Made or created within 90 days before the date the universal bank is ordered into
receivership, with the intent of giving to a creditor or depositor, or enabling a creditor or
depositor to obtain, a greater percentage of the creditor's or depositor's debt than is given
or obtained by another creditor or depositor of the same class;

(3) Accepted after the universal bank is ordered into receivership by a creditor or
depositor having reasonable cause to believe that a preference, as described in subsection

(b) of this section, will occur; or

(4) Voidable by the universal bank and the universal bank may recover the property
transferred, or its value, from the person to whom it was transferred or from a person who
has received it, unless the transferee or recipient was a bona fide holder for value before
the date the Commissioner takes possession of the universal bank or the date the universal
bank was ordered into receivership or conservatorship.

(b) A preference in a transfer or grant of an interest in the property or assets of a
universal bank shall be deemed to occur when:

(1) There is an intent to hinder, delay, or defraud an entity to which, on or after the date
that the transfer or grant of interest was made, the universal bank was or became
indebted; or

(2) Less than a reasonably equivalent value is obtained by the universal bank in
exchange for the transfer or grant of interest if the universal bank was insolvent when the
transfer or grant of interest was made or if the universal bank became insolvent as a result
of the transfer or grant of interest.

(c) Notwithstanding any other provision of this chapter, the receiver shall not void an
otherwise voidable transfer under this section if:

(1) The transfer or lien does not exceed $1,000 in value;

(2) The transfer or lien was received in good faith by a person who is not a person
described in subsection (a)(1) of this section and who gave value in exchange for the
transfer or lien; or

(3) The transfer or lien was intended by the universal bank and the transferee or lien
holder to be, and in fact substantially was, a contemporaneous exchange for new value
given to the universal bank.

(d) A person acting on behalf of the universal bank w T ho knowingly participated in making
or implementing a voidable transfer or lien, and each person receiving property or assets, or
the benefit of property or assets, of the universal bank as a result of a voidable transfer or
lien, shall be personally liable for the property, assets, or benefit received and shall account to
the receiver for the benefit of the universal bank.

(June 9, 2001, D.C. Law 13-308, § 221, 48 DCR 3244.)

233

§ 26-1401.21 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.22. Maintenance and disposal of records by receiver.

(a) With the approval of the Superior Court, a receiver may dispose of records of the
universal bank in receivership that are obsolete and unnecessary to the continued administra-
tion of the receivership.

(b) The receiver may retain the records of the universal bank and the receivership for a
period of time that the receiver considers appropriate or for a period of time as ordered by
the Superior Court.

(c) The receiver may devise a method for the effective, efficient, and economical mainte-
nance of the records of the universal bank and of the receiver's office, including maintaining
the records on any medium approved by the Superior Court.

(d) The receiver may use assets of a universal bank to:

(1) Procure services to maintain the records of a liquidated universal bank; or

(2) Pay fees, as established by the Commissioner, to the Commissioner necessary for the
Commissioner to procure services to maintain the records of a liquidated universal bank.

(June 9, 2001, D.C. Law 13-308, § 222, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.23. Conservator; appointment; bond and security; qualifications;

expenses.

(a) If any of the grounds under § 26-1401.19 authorizing a request for the appointment of
a receiver exist or if the Commissioner determines that it is necessary to conserve the assets
of a universal bank for the benefit of the depositors, investors, or other creditors of the bank
or for the benefit of the general public, the Commissioner may petition the Superior Court to
appoint a conservator for a universal bank.

(b) The Department shall be reimbursed out of the assets of the conservatorship, as
expenses, for all sums expended by the Department in connection with the conservatorship.

(c) All expenses of a conservatorship shall be paid out of the assets of the universal bank
upon the approval of the Commissioner, shall be a first charge upon the assets of the
universal bank, and shall be paid in full before a final distribution or payment of dividends to
creditors or shareholders of the universal bank.

(June 9, 2001, D.C. Law 13-308, § 223, 48 DCR 3244; Oct. 26, 2001, D.C. Law 14-42, § 15, 48 DCR 7612;
Mar. 2, 2007, D.C. Law 16-191, § 49, 53 DCR 6794.)

Historical and Statutory Notes

Effect of Amendments Legislative History of Laws

D.C. Law 14^2 substituted ", as expenses," for For Law 13-308, see notes following

", as expenses" in subsec. (b). §26-1401.01.

D.C. Law 16-191, in subsec. (a), validated a Law 14^2, the "Technical Correction Amend-
previously made technical correction. m ^nt Act of 2001", was introduced in Council and
■~ a x a j assigned Bill No. 14-216, which was referred to the
Emergency Act Amendments Committee of the Whole. The Bill was adopted on

For temporary (90 day) amendment of section, fi rst and second readings on June 5, 2001, and

see § 15 of Technical Amendments Emergency June 26, 2001, respectively. Signed by the Mayor

Act of 2001 (D.C. Act 14-108, August 3, 2001, 48 on July 24, 2001, it was assigned Act No. 14-107

DCR 7622). and transmitted to both Houses of Congress for its

234

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.25

review. D.C. Law 14-42 became effective on Octo- For Law 16-191, see notes following
ber 26, 2001. § 26-702.01.

§ 26-1401.24. Conservator; rights, powers, and privileges.

(a) Subject to the supervision of the Commissioner, the conservator shall take possession of
the books, records, and assets of the bank and shall take any action necessary to conserve the
assets of the universal bank pending further disposition of the business of the universal bank
as provided by law.

(b) Subject to Superior Court approval and under the supervision of the Commissioner, the
conservator shall:

(1) Take possession of the books, records, and assets of the universal bank and collect all
debts, dues, and claims belonging to the universal bank;

(2) Sue, defend, compromise, arbitrate, or otherwise settle claims involving the universal
bank;

(3) Sell real and personal property if necessary to conserve the assets of the bank;

(4) Exercise all fiduciary functions of the universal bank;

(5) Pay all administrative expenses of the conservatorship, which expenses shall be a
first charge upon the assets of the universal bank and shall be fully paid before a final
distribution or payment of dividends to creditors or shareholders;

(6) Pay the debts of the universal bank if the conservator determines that payment of
the debts is in the best interests of the universal bank;

(7) Have all the powers of the directors, officers, and shareholders of the universal bank
as necessary to support an action taken on behalf of the universal bank; and

(8) Hold title to all the bank's property, contracts, and rights of action.

(2) Exercise any other power and duty authorized by the Superior Court.

(d) Unless otherwise provided by law, a conservator, other than a conservator who is an
employee of the Department and acting in his or her official capacity, shall post a bond in an
amount to be determined by the Superior Court

(e) The conservator shall, on a regular basis, report to the Commissioner regarding all
matters involving the conservatorship.

(June 9, 2001, D.C. Law 13-308, § 224, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.25. Deposits received while universal bank in conservatorship.

(a) While a universal bank is in conservatorship, the Commissioner may require the
conservator to set aside and make available for withdrawal by depositors or investors and
payment to other creditors, ratably, amounts that the Commissioner determines may be used
safely and soundly for such withdrawals and payments.

(b) The Commissioner may permit the conservator to receive deposits.

(c) Deposits received while the universal bank is in conservatorship shall not be subject to
any limitation on payment or withdrawal. The deposits, and any new assets acquired on

235

§ 26-1401.25 BANKS AND OTHER FINANCIAL INSTITUTIONS

account of the deposits, shall be segregated and held for the new deposits and shall not be
used to liquidate any indebtedness of the universal bank;

(1) Existing at the time that a conservator was appointed for the universal bank; or

(2) Incurred after a conservator was appointed and was incurred for the purpose of
liquidating any indebtedness of the universal bank existing at the time that the conservator
was appointed.

(d) Deposits received while the universal bank is in conservatorship shall be kept in cash,
invested in direct obligations of the United States, or deposited in depository institutions
designated by the Commissioner.

(e) The requirements of subsections (c) and (d) of this section shall remain in effect for 15
days following the date that the conservator returns control of the universal bank to its board
of directors, or for such shorter period as the Commissioner may designate.

(f) Before returning control of the universal bank to its board of directors, the conservator
shall publish a notice in a paper of general circulation in the District of Columbia in a form
approved by the Commissioner, stating the date on which the affairs of the universal bank
will be returned to its board of directors and that the provisions of subsection (c) or (d) of this
section will not be in effect after 15 days from that date. The conservator shall send a copy of
the notice described in the previous sentence to each person who deposited money in the
universal bank after the appointment of the conservator and before the time when control of
the universal bank is returned to the board of directors.

(June 9, 2001, D.C. Law 13-308, § 225, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.26. Authority of conservator to borrow money; purpose.

(a) With the prior approval of the Commissioner, the conservator of a universal bank may
borrow money to aid in the operation, reorganization, or liquidation of the bank, including the
payment of liquidating dividends.

(June 9, 2001, D.C. Law 13-308, § 226, 48 DCR 3244.)

Historical and Statutory Notes
Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.27. Termination of conservatorship.

(a) If the Commissioner determines that termination of the conservatorship and resump-
tion of the transaction of the universal bank's business by the universal bank can be achieved
and maintained in a safe and sound manner and is otherwise in the public interest, the
Commissioner may petition the Superior Court to terminate a conservatorship and permit the
universal bank to resume the transaction of its business, subject to terms, conditions,
restrictions, and limitations as the Commissioner determines are appropriate.

(b) If the Superior Court determines that reasons for the conservatorship no longer exist,
the Superior Court may dissolve the conservatorship and terminate any pending proceedings.

(c) If the Commissioner determines that it would be in the public interest, the Commission-
er may petition the Superior Court for termination of a conservatorship and appointment of a
receiver for the universal bank under § 26-1401.20.

(June 9, 2001, D.C. Law 13-308, § 227, 48 DCR 3244.)

236

BANKS AND OTHER FINANCIAL INSTITUTIONS § 26-1401.31

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

Subchapter VI. Miscellaneous Provisions.

§ 26-1401.28. Articles of incorporation and bylaws.

A universal bank may operate under the articles of incorporation and bylaws which were in
effect before the universal bank's certification as a universal bank or under subsequently
amended articles of incorporation and bylaws which are consistent with the provisions and
purposes of this chapter.

(June 9, 2001, D.C. Law 13-308, § 228, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following

§ 26-1401.01.

§ 26-1401.29. Acquisitions, mergers and asset purchases.

(a) A universal bank may purchase the assets of, merge with, acquire, or be acquired by, a
financial institution, or the holding company of a financial institution, only after a written
application to the Commissioner and the written approval of the application by the Commis-
sioner.

(b) An application for approval of the Commissioner under subsection (a) of this section
shall be submitted on a form, and accompanied by a fee, prescribed by the Commissioner. In
reviewing and approving or disapproving an application under this section, the Commissioner
shall apply the standards required by the District of Columbia Banking Code, including the
applicant's general plan of business, proposed plan of capital investment in the District, and
community development program.

(June 9, 2001, D.C. Law 13-308, § 229, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.30. Fees.

The Commissioner may establish fees for the filing of documents, the processing of
applications, and other sendees provided by the Commissioner or the Department under this
chapter.

(June 9, 2001, D.C. Law 13-308, § 230, 48 DCR 3244.)

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

§ 26-1401.31. Rulemaking.

The Commissioner may prescribe rules governing the activities of universal banks and
implementing this chapter, pursuant to subchapter I of Chapter 5 of Title 2.

(June 9, 2001, D.C. Law 13-308, § 231, 48 DCR 3244.)

237

§ 26-1401.31 BANKS AND OTHER FINANCIAL INSTITUTIONS

Historical and Statutory Notes

Legislative History of Laws

For Law 13-308, see notes following
§ 26-1401.01.

TITLE 27

CIVIL RECOVERY BY MERCHANTS FOR CRIMINAL CONDUCT.

Chapter Section

1 . Merchant's Civil Recovery for Criminal Conduct 27-1 02

Chapter 1
Merchant's Civil Recovery for Criminal Conduct.

Section

27-102. Liability and damages.
27-106. Attorney's fees.

§ 27-102. Liability and damages.

Notes of Decisions

Claims 2 F.Supp.2d 68. Corporations And Business Organi-

Standing 1 zations <s^ 1570

~~ ~ 2. Claims

1. Standing Under D.C. Merchant's Civil Recovery For

Shareholder failed to allege how his interest in Criminal Conduct Act, as interpreted by the dis-

selling consumer services was special or distinct trict court, allegations by professional corporation,

from professional corporation's interest, thus that it was a merchant and that former bookkeeper

shareholder lacked standing under District of Co- committed fraud and theft against it in its capacity

lumbia law to sue for violation of D.C. Merchant's as merchant, stated claim against bookkeeper.

Civil Recovery For Criminal Conduct Act. Har- Harpole Architects, P.C. v. Barlow, 2009, 668

pole Architects, P.C. v. Barlow, 2009, 668 F.Supp.2d 68. Criminal Law <^ 1220

§ 27-106. Attorney's fees.

Notes of Decisions

Construction and application 1 Merchant's Civil Recovery For Criminal Conduct

Act, corporation was entitled to attorneys' fees.

Harpole Architects, P.C. v. Barlow, 2009, 668

1. Construction and application F.Supp.2d 68. Corporations And Business Organi-

To extent professional corporation could recover nations <£=> 1928
for losses from former bookkeeper under D.C.

239

TITLE 28

COMMERCIAL INSTRUMENTS AND TRANSACTIONS.

SUBTITLE I. UNIFORM COMMERCIAL CODE.
Article Section

1 General Provisions 28:1-101

2 Sales 28:2-104

2A Leases 28:2A-204

3 Negotiable Instruments 28:3-1 1

SUBTITLE I
UNIFORM COMMERCIAL CODE.

Article 1
General Provisions.

Part 1. Short Title, Construction, Application
and Subject Matter.

Section

28:1-101. Short title.

28:1-103. Supplementary general principles of
law applicable.

Part 2. General Definitions and
Principles of Interpretation.

Section

1-201.
1-203.
1-205.

General definitions.

Obligation of good faith.

Course of dealing and usage of trade.

Part 1. Short Title, Construction, Application and Subject Matter,
§ 28:1-101. Short title.

Historical and Statutory Notes

Miscellaneous Notes

Section 39(a) of D.C. Law 15-354 provides that
Title 28 is designated Title 28 of the District of
Columbia Official Code.

§ 28:1-103. Supplementary general principles of law applicable.

Notes of Decisions

3. Good faith

Under District of Columbia law, breach of duty
of good faith and fair dealing must necessarily
arise out of contract's performance or enforcement,
not out of contract negotiations. C & E Services,
Inc. v. Ashland Inc., 2009, 601 F.Supp.2d 262.
Contracts ^> 168

Under District of Columbia law, implied cove-
nant of good faith and fair dealing is to be treated
as though it were term of contract, and thus to
breach covenant is to breach contract. C & E
Services, Inc. v. Ashland Inc., 2009, 601 F.Supp.2d
262. Contracts c^ 168

240

COMMERCIAL INSTRUMENTS &' TRANSACTIONS

Part 2. General Definitions and Principles of Interpretation.

§ 28:1-205

Note 3

§ 28:1-201.-. Genera! definitions.

Notes of Decisions

2. Holder in due course

§ 28:1-203. Obligation of good faith.

signee knew or should have known that they could
not afford the loan and that there was no reason-
able probability that they could pay it. Carroll v.
Fremont Inv.'& Loan/ 2009, 636 F.Supp.2d 41.
Mortgages <3=> 216

Notes of Decisions

1. In general

In context of claim for breach of the covenant of
good faith and fair dealing, "bad faith" involves
evasion of the spirit of the bargain, lack of dili-
gence and slacking off, willful rendering of imper-
fect performance, abuse of a power to specify
terms, and interference with or failure to cooper-
ate in the other party's performance; "bad faith"
means more than mere negligence. Allworth v.
Howard University, 2006, 890 A.2d 194. Contracts
<©=> 312(1)

Subterfuges and evasions are not included in
examples of "good faith" for purposes of claim for
breach of the covenant of good faith and fair
dealing, and "bad faith" may be overt or may
consist of inaction, and "fair dealing" may require
more than honesty. Allworth v. Howard Universi-

"Good faith" performance or enforcement of a
contract emphasizes faithfulness to an agreed com-
mon purpose and consistency with the justified
expectations of the other party; it excludes a
variety of types of conduct characterized as involv-
ing "bad faith" because they violate standards of
decency, fairness or reasonableness. Allworth v.
Howard University, 2006, 890 A.2d 194. Contracts
<^> 189

If the party to a contract evades the spirit of the
contract, willfully renders imperfect performance,
or interferes with performance by the other party,
he or she may be liable for breach of the implied
covenant of good faith and fair dealing. Allworth
v. Howard University, 2006, 890 A2d 194. Con-
tracts <&> 312(1)

§ 28:1-205. Course of dealing and usage of trade.

Notes of Decisions

1. In general

In deciding whether contract language is ambig-
uous under District of Columbia law, court- looks
beyond language itself and determines what rea-
sonable person in position of parties would have
thought disputed language meant. Potomac Elec.
Power Co. v. Mirant Corp., 2003, 251 F.Supp.2d
144. Contracts <£=> 143(2)

3. Construction of contracts

Under District of Columbia law, while parties'
mutual assent to contract is most clearly evidenced
by terms of a signed written agreement, such a
signed writing is not essential to formation of
contract. Sturdza v. United Arab Emirates,
C.A.D.C.2002, 281 F.3d 1287, 350 U.S.App.D.C.
154, 62 U.S.P.Q.2d 1071, petition for certiorari
filed, case considered closed by u.s. supreme court,
certified question answered 11 A.3d 251, answer to
certified question conformed to 412 Fed.Appx. 317,
2011 WL 1099938, rehearing en banc denied, cer-
tiorari denied 132 S.Ct, 407, 181 L.Ed.2d 266,
rehearing denied 132 S.Ct. 870, 181 L.Ed.2d 568.
Contracts <$=> 31

Methane company's retention of investor's mon-
ey would be unjust, for purposes of establishing
unjust enrichment under District of Columbia law,
where investor gave company $180,000 to secure a
stake in the company, company accepted and used
money under guise of an investment, but company
failed to provide investor with written stock pur-
chase agreement, a signed, executed stock certifi-
cate, or any other executed documents that might
evidence investor's ownership in company, failed to
treat investor as an owner of the company in any
way, and was unwilling or unable to provide inves-
tor with confirmation of any of its business deal-
ings. Lozinsky v. Georgia Resources Manage-
ment, LLC, 2010, 734 F.Supp.2d 150. Implied
And Constructive Contracts <3=> 3

Under District of Columbia law, first step in
construction of contracts is to determine what
reasonable person in position of parties would have
thought disputed language meant. Sigmund v.
Progressive Northern Ins. Co., 2005, 374
F.Supp.2d 33, affirmed 179 Fed.Appx. 61, 2006 WL
1208032. Contracts <£=> 152

Under District of Columbia law, quasi-contractu-
al obligation does not arise when it would not be

241

§ 28:1-205

COMMERCIAL INSTRUMENTS & TRANSACTIONS

Note 3

unfair for recipient to keep benefit without having
to pay for it; plaintiff must prove not only that he
has conferred an advantage upon defendant, but
that retention of benefit without compensating one
who conferred it is unjustified. Perles v. Kagy,
2005, 362 F.Supp.2d 195, affirmed in part, vacated
in part and remanded 473 F.3d 1244, 374 U.S.App.
D.C. 261, rehearing en banc denied. Implied And
Constructive Contracts @» 2.1

Under District of Columbia law, existence of
contract implied-in-fact requires finding of tradi-
tional fundamental contract elements other than
expression, e.g. agreement as to all material terms
including consideration. Perles v. Kagy, 2005, 362
F.Supp.2d 195, affirmed in part, vacated in part
and remanded 473 F.3d 1244, 374 U.S.App.D.C.
261, rehearing en banc denied. Contracts @» 27

To establish existence of contract implied-in-fact
under District of Columbia law, party must initially
demonstrate: (1) that valuable services were ren-
dered; (2) to person from whom recovery is sought;
(3) which services were accepted by that person;
and (4) under such circumstances as reasonably
notified person that plaintiff expected to be paid by
that person. Perles v. Kagy, 2005, 362 F.Supp.2d
195, af firmed in part, vacated in part and remand-
ed 473 F.3d 1244, 374 U.S.App.D.C. 261, rehearing
en banc denied. Implied And Constructive Con-
tracts <&=> 30

Under District of Columbia law, for enforceable
agreement to exist, there must be both (1) agree-
ment as to all material terms, and (2) intention of
parties to be bound. Cambridge Holdings Group,
Inc. v. Federal Ins. Co., 2004, 357 F.Supp.2d 89,
appeal dismissed 489 F.3d 1356, 376 U.S.App.D.C.
520, rehearing en banc denied. Contracts ©^ 14;
Contracts @=* 15

In the District of Columbia a contract is formed
when the offer is accepted. Samra v. Shaheen
Business and Investment Group, Inc., 2005, 355
F.Supp.2d 483. Contracts <s= 16; Contracts <$=>
146

In examining whether a contract is unconsciona-
ble under District of Columbia law, the court must
determine whether one party lacked a meaningful
choice and the contract terms were unreasonably
favorable to the other party. Booker v. Robert
Half Intern., Inc., 2004, 315 F.Supp.2d 94, affirmed
413 F.3d 77, 367 U.S.App.D.C. 77. Contracts <©=> 1

Under District of Columbia law, a signature on a
contract indicates mutuality of assent and a party
is bound by the contract unless he or she can show
special circumstances relieving him or her of such
an obligation. Booker v. Robert Half Intern., Inc.,
2004, 315 F.Supp.2d 94, affirmed 413 F.3d 77, 367
U.S.App.D.C. 77. Contracts <®= 1; Contracts <£=>
35

Under District of Columbia law, signature on
contract indicates mutuality of assent and party is
bound by contract unless he or she can show
special circumstances relieving him or her of such
an obligation. Sapiro v. VeriSign, 2004, 310
F.Supp.2d 208. Contracts ©=> 1; Contracts ©=> 35

Under District of Columbia law, contract should
be read so as to honor intent of what reasonable
person, in position of parties at time contract was
executed, would have thought. Sapiro v. VeriSign,
2004, 310 F.Supp.2d 208. Contracts ©= 147(1)

In analyzing claim that contract was unconscion-
able, determination of whether party had meaning-
ful choice in execution of contract can only be
made by consideration of all circumstances sur-
rounding transaction; factors court can consider in
making this determination include (1) whether'
meaningfulness of choice is negated by gross in-
equality of bargaining power and (2) circumstances
surrounding contract's formation, i.e., whether
each party to contract, considering his or her
obvious education or lack thereof, had reasonable
opportunity to understand terms of contract, or
whether important terms were hidden in maze of
fine print and minimized by deceptive sales prac-
tices. Brown v. Dorsey & Whitney, LLP., 2003,
267 F.Supp.2d 61. Contracts ®» 1

Signature on contract indicates mutuality of as-
sent and party is bound by contract unless he or
she can show special circumstances relieving him
or her of that obligation. Brown v. Dorsey &
Whitney, LLP., 2003, 267 F.Supp.2d 61. Contracts
@=>1; Contracts^ 35

Under District of Columbia law, the reasonable-
ness determination involving an evaluation of the
surrounding circumstances in determining what a
reasonable person in the position of the parties
would have thought of the disputed contract lan-
guage is to be applied whether the contract's lan-
guage appears ambiguous or not. Greene v.
Rumsfeld, 2003, 266 F.Supp.2d 125. Contracts ©=»
152; Contracts ©=* 169

The objective reasonable person assessing the
contract's language is presumed to know all the
circumstances before and contemporaneous with
the making of the agreement and extrinsic evi-
dence is admissible under District of Columbia law
to determine the nature of those circumstances.
Greene v. Rumsfeld, 2003, 266 F.Supp.2d 125.
Contracts ©^ 152; Contracts ©» 169; Evidence ©^
448

Although extrinsic evidence of the parties' sub-
jective intent in making a contract under District
of Columbia law may be resorted to only if the
document is ambiguous, extrinsic evidence may be
considered to determine the circumstances sur-
rounding the making of the contract so that it may
be ascertained what a reasonable person in the
position of the parties would have thought the
words meant. Greene v. Rumsfeld, 2003, 266
F.Supp.2d 125. Evidence &» 448

Under District of Columbia law, provision in
asset purchase and sales agreement requiring buy-
er to assume liability and indemnify seller for
expenses related to asbestos-related lawsuits
"which have been filed with any state or federal
court having jurisdiction prior to the Closing Date"
was ambiguous as to buyer's liability arising from
suit filed before closing date, but which did not
name seller as defendant until after closing date,

242

COMMERCIAL INSTRUMENTS & TRANSACTIONS

and thus court could consider extrinsic evidence to
determine provision's scope in seller's suit seeking
contractual indemnification for sums it paid in
connection with suit. Potomac Elec. Power Co. v.
Mirant Corp., 2003, 251 F.Supp.2d 144. Evidence
<&=» 450(8)

In the District of Columbia, a complete enforce-
able contract exists when there is (1) an agreement
as to all the material terms; and (2) an intention of
the parties to be bound. Hood v. District of
Columbia, 2002, 211 F.Supp.2d 176. Contracts ©=»
14; Contracts <s^ 15

Under District of Columbia law, there must thus
be an honest and fair meeting of the minds as to
all issues in a contract. Hood v. District of Colum-
bia, 2002, 211 F.Supp.2d 176. Contracts ©=> 15

Under District of Columbia law, mutual assent is
most clearly evinced by the terms of a signed
written agreement, but such a signed writing is not
essential to the formation of a contract; the parties'
acts at the time of the making of the contract are
also indicative of a meeting of the minds. Hood v.
District of Columbia, 2002, 211 F.Supp.2d 176.
Contracts ©=> 15; Contracts ©^ 31

Under District of Columbia law, a valid and
enforceable contract requires both (1) agreement
as to all material terms, and (2) intention of the
parties to be bound; thus, there must be an honest
and fair meeting of the minds as to all issues in a
contract. Johnson v. Mercedes-Benz, USA, LLC,
2002, 182 F.Supp.2d 58. Contracts &* 14; Con-
tracts <s=» 15

Under either Russian, Canadian or District of
Columbia law, there was no basis upon which to
infer an exclusivity contract between the parties
whereby Canadian company would be the sole and
exclusive purchaser of Russian SKS carbine rifles
for distribution in the United States and Canada
since several material terms were missing from the
alleged agreement; parties' correspondence did not
adequately specify the subject matter of the con-
tract, the number of goods to be exclusively sold to
Canadian company and the duration or geographi-
cal scope of the exclusivity. Century International
Arms, Ltd. v. Federal State Unitary Enterprise
State Corporation "Rosvoorouzheinie', 2001, 172
F.Supp.2d 79. Contracts ©=> 9(1)

Under District of Columbia law, a contract must
be sufficiently definite as to its material terms
(which include, e.g., subject matter, price, payment
terms, quantity, quality, and duration) that the
promises and performance to be rendered by each
party are reasonably certain; test is met when the
contract provides a sufficient basis for determining
whether a breach has occurred and for identifying
an appropriate remedy. Century International
Arms, Ltd. v. Federal State Unitary Enterprise
State Corporation "Rosvoorouzheinie', 2001, 172
F.Supp.2d 79. Contracts <^ 9(1)

Unjust enrichment occurs when: (1) the plaintiff
conferred a benefit on the defendant; (2) the defen-
dant retains the benefit; and (3) under the circum-
stances, the defendant's retention of the benefit is
unjust. News World Communications, Inc. v.

§ 28:1-205

Note 3

Thompsen, 2005, 878 A.2d 1218. Implied And
Constructive Contracts <&* 3

For the plaintiff to recover on a quasi-contractu-
al claim, he must show that the defendant was
unjustly enriched at his expense and that the
circumstances were such that in good conscience
the defendant should make restitution. News
World Communications, Inc. v. Thompsen, 2005,
878 A.2d 1218. Implied And Constructive Con-
tracts @=» 3; Implied And Constructive Contracts
<§=> 4

Where a contract may reasonably be viewed as
having more than one possible meaning, the court
may look not only to the language employed, but
also to the subject-matter and the surrounding
circumstances, and may avail itself of the same
light which the parties possessed when the con-
tract was made. Independence Management Co.,
Inc. v. Anderson & Summers, LLC, 2005, 874 A.2d
862. Contracts ©=> 175(2)

A court must honor the intentions of the parties
as reflected in the settled usage of the terms they
accepted in the contract and will not torture words
to import ambiguity where the ordinary meaning
leaves no room for ambiguity. Independence
Management Co., Inc. v. Anderson & Summers,
LLC, 2005, 874 A.2d 862. Contracts <&=> 143(2);
Contracts ©=> 147(2)

Where the contractual language in question is
unambiguous, its interpretation is a question of law
for the court. Independence Management Co.,
Inc. v. Anderson & Summers, LLC, 2005, 874 A.2d
862. Contracts ®=> 176(2)

The writing evidencing a contract must be inter-
preted as a whole, giving a reasonable, lawful, and
effective meaning to all its terms. Independence
Management Co., Inc. v. Anderson & Summers,
LLC, 2005, 874 A.2d 862. Contracts ©=> 143.5;
Contracts <£=> 153; Contracts <£=> 154

In construing a contract, a court must detennine
w T hat a reasonable person in the position of the
parties would have thought the disputed language
meant. Independence Management Co., Inc. v.
Anderson & Summers, LLC, 2005, 874 A.2d 862.
Contracts ©=> 152

An "implied-in-fact contract" is a true contract,
containing all necessary elements of a binding
agreement; it differs from other contracts only in
that it has not been committed to writing or stated
orally in express terms, but is inferred from the
conduct of the parties in the milieu in which they
dealt. Jordan Keys & Jessamy, LLP v. St. Paul
Fire and Marine' Ins. Co., 2005, 870 A.2d 58.
Contracts ©=* 27

Bylaws and other contracts are to be construed
as a whole in a manner consistent with the clear,
simple and unambiguous meaning of their lan-
guage. Meshel v. Ohev Sholom Talmud Torah,
2005, 869 A.2d 343. Contracts <£=> 143.5; Con-
tracts @=» 152; Corporations And Business Organi-
zations &=> 1263

Court must honor the intentions of the parties as
reflected in the settled usage of the terms they
accepted in contract, and will not torture words to

243

§ 28:1-205

Note 3

import ambiguity where the ordinary meaning
leaves no room for ambiguity. Bragdon v. Twen-
ty-Five Twelve Associates Ltd. Partnership, 2004,
856 A.2d 1165. Contracts <3=> 143(2); Contracts <3=>
147(2)

Courts follow what has been called the "objec-
tive" law of contracts, which generally means that
the written language embodying the terms of an
agreement will govern the rights and liabilities of
the parties, regardless of the intent of the parties
at the time they entered into the contract, unless
the written language is not susceptible of a clear
and definite undertaking, or unless there is fraud,
duress, or mutual mistake. Bragdon v. Twenty-
Five Twelve Associates Ltd. Partnership, 2004, 856
A.2dll65. Contracts <3=> 147(2)

In every contract, there is an implied covenant
of good faith and fair dealing that neither party
shall do anything which will have the effect of
destroying or injuring the right of the other party
to receive the fruits of the contract. Willens v.
2720 Wisconsin Ave. Co-op. Ass'n, Inc., 2004, 844
A.2d 1126. Contracts <$=> 168

A writing must be interpreted as a whole, giving
a reasonable, lawful, and effective meaning to all
its terms. Saul Subsidiary II Ltd. Partnership v.
Venator Group Specialty, Inc., 2003, 830 A.2d 854.
Contracts ©=> 143.5

Where the contract language in question is un-
ambiguous, its interpretation is a question of law
for the court. Saul Subsidiary II Ltd. Partnership
v. Venator Group Specialtv, Inc., 2003, 830 A.2d
854. Contracts <&=> 176(2)

When a contract does not specify a time for
performance, that ordinarily does not render the
contract ambiguous; the law implies a reasonable
time. DSP Venture Group, Inc. v. Allen, 2003, 830
A.2d 850. Contracts <3=* 212(2)

Where an ambiguity is present, the intent and
understanding of the parties is of critical impor-
tance in order to determine whether the parties
have formed a binding agreement. Howard Uni-
versity v. Lacy, 2003, 828 A.2d 733, rehearing
granted in part 833 A.2d 991. Contracts <&=>
147(1); Contracts <$=> 170(1)

In order to form a binding agreement, both
parties must have the distinct intention to be
bound; without such intent, there can be no assent
and therefore no contract. Howard University v.
Lacy, 2003, 828 A.2d 733, rehearing granted in
part 833 A.2d 991. Contracts <&=> 14

In determining whether the parties entered into
a contract, the intent of each party must be closely
examined. Howard University v. Lacy, 2003, 828
A.2d 733, rehearing granted in part 833 A.2d 991.
Contracts <3=> 14

A quasi-contract is not a contract at all, but a
duty thrust under certain conditions upon one
party to requite another in order to avoid the
former's unjust enrichment. Fischer v. Estate of
Flax, 2003, 816 A.2d 1. Implied And Constructive
Contracts ©=» 2.1

An "implied-in-fact contract" is a true contract,
containing all necessary elements of a binding

COMMERCIAL INSTRUMENTS & TRANSACTIONS

agreement; it differs from other contracts only in
that it has not been committed to writing or stated
orally in express terms, but rather is inferred from
the conduct of the parties in the milieu in which
they dealt. Fischer v. Estate of Flax, 2003, 816
A.2d 1. Contracts <&=> 27

As a general rule, absent fraud or mistake, one
who signs a contract is bound by a contract which
he has an opportunity to read whether he does so
or not. Forrest v. Verizon Communications, Inc.,
2002, 805 A.2d 1007. Contracts <$=> 93(2)

A contract is no less a contract simply because it
is entered into via a computer. Forrest v. Verizon
Communications, Inc., 2002, 805 A.2d 1007. Con-
tracts <3=> 1

In the absence of fraud, duress, or mistake, one
who signs a contract which he had an opportunity
to read and understand is bound by its provisions
unless enforcement of the agreement should be
withheld because the terms of the contract are
unconscionable. Pers Travel, Inc. v. Canal Square
Associates, 2002, 804 A.2d 1108. Contracts £==> 1

The fact that a party may elect not to read a
contract before signing it does not invalidate the
contract. Pers Travel, Inc. v. Canal Square Asso-
ciates, 2002, 804 A.2d 1108. Contracts <^> 93(2)

Generally, whether contracting parties have exe-
cuted a new agreement or instead modified their
original agreement is a question of fact. Hildreth
Consulting Engineers, P.C. v. Larry E. Knight,
Inc., 2002, 801 A.2d 967. Contracts <&=> 248

Generally, courts interpret the terms of a con-
tract in a manner consistent with ordinary speech.
Stevens v. United General Title Ins. Co., 2002, 801
A.2d 61. Contracts <^ 152

District of Columbia adheres to the "objective
law" of contracts, which means that the written
language will govern the rights and liabilities of
the parties unless it is not susceptible of clear
meaning, or unless there is evidence of fraud,
duress, or mutual mistake. Double H Housing
Corp. v. Big Wash, Inc., 2002, 799 A.2d 1195, as
amended. Contracts <&=> 143(1)

Laws in effect at the time of the making of a
contract form a part of the contract as fully as if
they had been expressly referred to or incorporat-
ed in its terms. Double H Housing Corp. v. Big-
Wash, Inc., 2002, 799 A.2d 1195, as amended.
Contracts <5=> 167

An "implied-in-fact contract" is inferred from
the conduct of the parties in the milieu in which
they dealt. Union Light & Power Co. v. District of
Columbia Dept. of Employment Services, 2002, 796
A.2d665. Contracts ©=> 27

The written language of a contract governs the
parties' rights unless it is not susceptible of clear
meaning. Patterson v. District of Columbia, 2002,
795 A.2d 681, opinion amended on denial of rehear-
ing 819 A.2d 320. Contracts <3=> 143(1)

Fundamentally, when interpreting a contract,
the court should look to the intent of the parties
entering into the agreement. Patterson v. District
of Columbia, 2002, 795 A.2d 681, opinion amended

244

COMMERCIAL INSTRUMENTS & TRANSACTIONS

on denial of rehearing 819 A.2d 320. Contracts <£=>
147(1)

In deciding whether contract language is suscep-
tible of clear meaning, the court looks to the
contract language itself, and asks generally what a
reasonable person in the position of the parties
would have thought the disputed language meant.
Patterson v. District of Columbia, 2002, 795 A.2d
681, opinion amended on denial of rehearing 819
A.2cl320. Contracts ©=> 147(2)

An evaluation of the surrounding circumstances,
to determine what a reasonable person in the
position of the parties would have thought the
disputed language meant, is to be applied whether
the contract's language appears ambiguous or not.
Patterson v. District of Columbia, 2002, 795 A.2d
681, opinion amended on denial of rehearing 819
A.2d 320. Contracts <$=> 169

A contract is "ambiguous" when it is reasonably
susceptible of different constructions or interpreta-
tions, or of two or more different meanings.
Deutsch v. Barskv, 2002, 795 A.2d 669. Contracts
^ 143(2)

A promise to refrain from competition that im-
poses a restraint that is ancillary to an ■ otherwise
valid transaction or relationship is unreasonably in
restraint of trade if: (1) the restraint is greater
than is needed to protect the promisee's legitimate
interest, or (2) the promisee's need is outweighed
by the hardship to the promisor and the likely
injury to the public. Deutsch v. Barsky, 2002, 795
A.2d669. Contracts @=» 116(1)

A covenant not to compete limited by time and
space may be valid. Deutsch v. Barsky, 2002, 795
A.2d 669. Contracts &* 116(1)

When a contract lapses but the parties to the
contract continue to act as if they are performing
under a contract, the material terms of the prior
contract will survive intact unless either one of the
parties clearly and manifestly indicates, through
words or through conduct, that it no longer wishes
to continue to be bound thereby, or both parties
mutually intend that the terms not survive. Hahn
v. University of District of Columbia, 2002, 789
A.2d 1252. Contracts <$=> 215(1)

In a contract case, summary judgment is appro-
priate where the contract is unambiguous since,
absent such ambiguity, a written' contract duly
signed and executed speaks for itself and binds the
parties without the necessity of extrinsic evidence.
District No. 1-Pacific Coast Dist. v. Travelers Cas.
and Sur. Co., 2001, 782 A2d 269. Federal Courts
<&=> 1055

A contract is not made ambiguous merely by the
fact that the parties dispute its meaning or that its
terms are complex or could have been clearer.
District No. 1 --Pacific Coast Dist. v. Travelers Cas.
and Sur. Co., 2001, 782 A.2d 269. Contracts ®=>
143(2)

A contract is ambiguous, when it is reasonably
or fairly susceptible of different constructions or
interpretations. District No. 1-Pacific Coast Dist.
v. Travelers Cas. and Sur. Co., 2001, 782 A.2d 269.
Contracts &=> 143(2)

§ 28:1-205

Note 3

Because determination of what the contracting
parties intended is an objective inquiry, the first
step — and often the final one — is to decide what a
reasonable person in the position of the parties
would have thought the terms of the contract
meant. District No. 1-Pacific Coast Dist. v. Trav-
elers Cas. and Sur. Co., 2001, 782 A.2d 269. Con-
tracts ©=> 147(1)

Where a legal theory that a party does advance
is grounded on a contract that is before the court,
the court does have a duty to read the contract
without blinkers on, so that it can discern the
meaning and applicability of its provisions correct-
ly. Chase v. State Farm Fire and Cas. Co., 2001,
780 A.2d 1123. Contracts ®^ 143(1)

Parol evidence rule did not apply to, and there-
fore did not bar extrinsic evidence regarding, the
determination of which travel agency signed, as
lessee, a lease of an automated computer airline
reservation and ticketing system. Affordable Ele-
gance Travel, Inc. v. Worldspan, L.P., 2001, 774
A2d 320. Evidence <&=» 459(1)

The parol evidence rule applies only to the actu-
al terms of the contract itself, not to the prelimi-
nary determination of who the contracting parties
were. Affordable Elegance Travel, Inc. v. World-
span, L.P., 2001, 774 A2d 320. Evidence ®=»
459(1)

If a document is facially unambiguous, its lan-
guage should be relied upon as providing the best
objective manifestation of the parties' intent. Af-
fordable Elegance Travel, Inc. v. Worldspan, L.P.,
2001, 774 A.2d 320. Contracts <^ 147(2)

In order to be enforceable, a contract must be
sufficiently definite as to its "material terms,"
which include, e.g., subject matter, price, payment
terms, quantity, and duration, so that the promises
and performance to be rendered by each party are
reasonably certain. Affordable Elegance Travel,
Inc. v. Worldspan, L.P., 2001, 774 A.2d 320. Con-
tracts <$=> 9(1)

If the terms of the contract are clear enough for
the court to determine whether a breach has oc-
curred and to identify an appropriate remedy, it is
enforceable. Affordable Elegance Travel, Inc. v.
Worldspan, L.P., 2001, 774 A.2d 320. Contracts
<&=>9(1)

Any ambiguity in a contract will be construed
against the drafter. Affordable Elegance Travel,
Inc. v. Worldspan, L.P., 2001, 774 A.2d 320. Con-
tracts <$=* 155

It is appropriate to consider the contract first
under the reasonable person standard and then, if
no result is reached regarding construction of the
contract, to apply the rule construing the contract
against the drafter as a rebuttable presumption.
Affordable Elegance Travel, Inc. v. Worldspan,
L.P., 2001, 774 A2d 320. Contracts <s^ 155

The first step in the construction of contracts is
to determine what a reasonable person in the
position of the parties would have thought the
disputed language meant. Travelers Indem. Co. of
Illinois v. United Food & Commercial Workers

245

§ 28:1-205

Note 3

Intern. Union, 2001, 770 A.2d 978. Contracts <^>
152

4. Evidence

Under District of Columbia law, developer,
which alleged that it had an enforceable agreement
with the District of Columbia to negotiate exclu-
sively to purchase property acquired by the Dis-
trict and that transit authority agreed to offer the
District the right of first refusal to purchase any
property that transit authority intended to sell,
alleged facts to support an inference that it was an
intended third-party beneficiary of the agreement
between the District of Columbia and transit au-
thority, and therefore developer adequately stated
a breach of contract claim against transit authority
based on its sale of subject property to another
bidder. Monument Realty LLC v. Washington

COMMERCIAL INSTRUMENTS & TRANSACTIONS

Under District of Columbia law, court constru-
ing ambiguous contract may consider circum-
stances before and contemporaneous with making
of contract, all habitual and customary practices
which either party knows or has reason to know,
circumstances surrounding transaction, and course
of conduct of parties to contract. Potomac Elec.
Power Co. v. Mirant Corp., 2003, 251 F.Supp.2d
144. Contracts ©=> 169; Contracts ©=* 170(1);
Customs And Usages ©^ 15(1)

Resort to extrinsic evidence is permissible for
interpretation of an ambiguous contract. District
No. 1-Pacific Coast Dist. v. Travelers Cas. and
Sur. Co., 2001, 782 A.2d 269. Evidence ^ 448

Article 2
Sales.

Part 1. Short Title, General Construction
and Subject Matter.

Section

28:2-104.

Definitions: "merchant"; "between
merchants"; "financing agency".

Part 2. Form, Formation and Readjustment
of Contract.

28:2-201. Formal requirements; statute of
frauds.

28:2-202. Final written expression: parol or
extrinsic evidence.

28:2-209. Modification, rescission and waiver.

28:2-210. Delegation of performance; assign-
ment of rights.

Part 3. General Obligation and
Construction of Contract.

28:2-313. Express warranties by affirmation,
promise, description, sample.

28:2-314. Implied warranty: merchantability;
usage of trade.

28:2-315. Implied warranty: fitness for partic-
ular purpose.

Section

28:2-316.01. Limitation of exclusion or modifica-
tion of warranties consumers.

Part 5. Performance.

28:2-508. Cure by seller of improper tender or
delivery; replacement.

Part 6. Breach, Repudiation and Excuse.

28:2-607. Effect of acceptance; notice of
breach; burden of establishing
breach after acceptance; notice of
claim or litigation to person an-
swerable over.

28:2-608. Revocation of acceptance in whole or
in part.

Part 7. Remedies.

28:2-706. Seller's resale including contract for
resale.

28:2-712. "Cover"; buyer's procurement of
substitute goods.

28:2-714. Buyer's damages for breach in re-
gard to accepted goods.

28:2-722. Who can sue third parties for injury
to goods.

28:2-725. Statute of limitations in contracts for
sale.

Part 1. Short Title, General Construction and Subject Matter.

§ 28:2-104. Definitions: "merchant"; "between merchants''; "financing agen-
cy".

Notes of Decisions
1. In general ington Metropolitan Area Transit Authority

Allegations that provider of components used in (WMATA) was sufficient to state that provider
electronic train control system provided such dealt "in goods of the kind," and thus, was a
equipment, software and support services to Wash-

246

COMMERCIAL INSTRUMENTS & TRANSACTIONS § 28:2-209

Note 2

merchant, under District of Columbia's Uniform sengers arising from train collision. In re Fort

Commercial Code (UCC), for purposes of breaches Totten Metrorail Cases Arising Out of the Events

of implied warranties of merchantability and fit- f June 2 2, 2009, 2011, 793 F.Supp.2d 133. Sales

ness for a particular purpose claims brought by ^ ^oa
rail passengers and estates of deceased rail pas-

Part 2. Form, Formation and Readjustment of Contract

§ 28:2-201. Formal requirements; statute of frauds.

Notes of Decisions

1. In general sale of goods, and retailer received, accepted, and

Wholesaler's agreement for sales of tobacco to paid for the goods at issue. Segal Wholesale, Inc.

retailer complied with the statute of frauds and v . United Drug Service, 2007, 933 A.2d 780.

was an enforceable contract in suit disputing price; Frauds, Statute Of ®=> 113(3); Frauds, Statute Of

invoices sufficiently memorialized the terms of the ^ 1 39(5). Frauds Statute Of <&=> 144
agreement, wholesaler conceded agreement for the

§ 28:2-202. Final written expression: parol or extrinsic evidence.

Notes of Decisions
Entire agreement reduced to writing 3 4. Partially integrated agreement

Partially integrated agreement 4 Invoices for wholesaler's sales to retailer were

- — not completely integrated for purposes of parol

evidence rule; the invoices were not a complete and

1. Parol or extrinsic evidence contradicting or exclusive statement of the terms of the agreement,

varying terms of written instrument but omitted other necessary terms such as the

Under the "parol evidence rule," extrinsic or met hod or timing of delivery. Segal Wholesale,

parol evidence which tends to contradict, vary, add Inc . v . United Drug Service, 2007, 933 A.2d 780.

to, or subtract from the terms of a written contract Evidence <®=» 400(3)
must be excluded. Affordable Elegance Travel,

Inc. v. Worldspan, L.P., 2001, 774 A.2d 320. Evi- Invoices for wholesaler's sales to retailer was

dence <&=> 397(1) partially integrated agreement on price and, there-
fore, could not be contradicted by evidence of any

2. Ambiguous contracts prior agreement or of a contemporaneous oral
Under District of Columbia law, contracts must agreement for a different price; the invoices unam-

be sufficiently definite as to their material terms. biguously specified the prices, and retailer paid all

Calvetti v. Antcliff, 2004, 346 F.Supp.2d 92. Con- but final invoice. Segal Wholesale, Inc. v. United

tracts <&=> 9(1) Drug Service, 2007, 933 A.2d 780. Evidence <$=>

3. Entire agreement reduced to writing 41J(13)

When the parties to a contract have reduced No extrinsic evidence may be introduced for a

their entire agreement to writing, the court will completely integrated agreement, but evidence

disregard and treat as legally inoperative parol consistent with the terms of a partially integrated

evidence of the prior negotiations and oral agree- agreement is permissible. Segal Wholesale, Inc. v.

ments. Segal Wholesale, Inc. v. United Drug Ser- United Drug Service, 2007, 933 A.2d 780. Evi-

vice, 2007, 933 A.2d 780. Evidence 1 @=> 397(1) dence ®=* 397(1); : Evidence ®=> 417(9)

§ 28:2-209. Modification, rescission and waiver.

United States Supreme Court

Repudiation nia Associates v. U.S., 2002, 122 S.Ct.

Limitations, contract repudiation, accrual of 1993, 536 U.S. 129, 153 L.Ed.2d 132, on

action, performance date or time of repu- remand 47 Fed.Appx. 565, 2002 WL

diation, election of promisee, see Franco- 31016676.

Notes of Decisions

2. Parol or extrinsic evidence lessee, a lease of an automated computer airline

Parol evidence rule did not apply to, and there- reservation and ticketing system. Affordable Ele-
fore did not bar extrinsic evidence regarding, the gance Travel, Inc. v. Worldspan, L.P., 2001, 774
determination of which travel agency signed, as A.2d 320. Evidence ©^ 459(1)

247

§ 28:2-209 commercial instruments & transactions

Note 2

The parol evidence rule is a matter of substan- Affordable Elegance Travel, Inc. v. Worldspan,

tive law, not a mere rule of evidence. Affordable L.P., 2001, 774 A.2d 320. Evidence &* 397(1)

Elegance Travel, Inc. v. Worldspan, L.P., 2001, 774 , „ ,. ' „ ' A

A.2d 320. Evidence *=> 384 4 ' Repudiation of contract

Where a party to an executed contract discovers

The parol evidence rule applies only to the actu- a material misrepresentation made in the execu-

al terms of the contract itself, not to the prelum- tion of the contract? that party may elect one of

nary determination of who the contracting parties two mutually exclusive remedies; he may either

were. Affordable Elegance Travel, Inc. v. World- affirm the contract an d sue for damages, or repu-

span, L.P., 2001, 774 A.2d 320. Evidence <3- diate the contract and reC over that with which he

459( ^ has parted. Dean v. Garland, 2001, 779 A.2d 911,

The parol evidence rule applies only to written certiorari denied 122 S.Ct 2591, 536 U.S. 924, 153

contracts that have been duly signed and executed. L.Ed.2d 780. Fraud <s= 32

§28:2-210. Delegation of performance; assignment of rights.

(1) A party may perform his duty through a delegate unless otherwise agreed or unless
the other party has a substantial interest in having his original promisor perform or control
the acts required by the contract. No delegation of performance relieves the party
delegating of any duty to perforin or any liability for breach.

(2) Except as other-wise provided in section 28:9^406, unless otherwise agreed all rights
of either seller or buyer can be assigned except where the assignment would materially
change the duty of the other party, or increase materially the burden or risk imposed on
him by his contract, or impair materially his chance of obtaining return performance. A
right to damages for breach of the whole contract or a right arising out of the assignor's
due performance of his entire obligation can be assigned despite agreement otherwise.

(2A) The creation, attachment, perfection, or enforcement of a security interest in the
seller's interest under a contract is not a transfer that materially changes the duty of or
increases materially the burden or risk imposed on the buyer or impairs materially the
buyer's chance of obtaining return performance within the purview of subsection (2) unless,
and then only to the extent that, enforcement actually results in a delegation of material
performance of the seller. Even in that event, the creation, attachment, perfection, and
enforcement of the security interest remain effective, but (a) the seller is liable to the buyer
for damages caused by the delegation to the extent that the damages could not reasonably
be prevented by the buyer; and (b) a court having jurisdiction may grant other appropriate
relief, including cancellation of the contract for sale or an injunction against enforcement of
the security interest or consummation of the enforcement.

(3) Unless the circumstances indicate the contrary a prohibition of assignment of "the
contract" is to be construed as barring only the delegation to the assignee of the assignor's
performance.

(4) An assignment of "the contract" or of "all my rights under the contract" or an
assignment in similar general terms is an assignment of rights and unless the language or
the circumstances (as in an assignment for security) indicate the contrary, it is a delegation
of performance of the duties of the assignor and its acceptance by the assignee constitutes
a promise by him to perform ' those duties. This promise is enforceable by either the
assignor or the other party to the original contract.

(5) The other party may treat any assignment which delegates performance as creating
reasonable grounds for insecurity and may without prejudice to his rights against the
assignor demand assurances from the assignee (section 28:2-609).

(Dec. 30, 1963, 77 Stat 644, Pub. L. 88-243, § 1; Oct 26, 2000, D.C. Law 13-201, § 201(c)(2), 47 DCR
7576; Apr. 13, 2005, D.C. Law 15-354, § 39(b), 52 DCR 2638.)

Historical and Statutory Notes

Effect of Amendments of the Whole. The Bill was adopted on first and

D.C. Law 15-354, in par. (2), substituted "section second readings on December 7, 2004, and Decem-

28:9^06" for "Section 9-406". ber 21, 2004, respectively. Signed by the Mayor

Legislative History of Laws on February 9, 2005, it was assigned Act No.

Law 15-354, the "Technical Amendments Act of 15-770 and transmitted to both Houses of Con-

2004", was introduced in Council and assigned Bill gress for its review. D.C. Law 15-354 became

No. 15-1130 which was referred to the Committee effective on April 13, 2005.

248

COMMERCIAL INSTRUMENTS & TRANSACTIONS

Notes of Decisions

§ 28:2-314

Note 9

Actions of assignee 1

1. Actions of assignee

Higher prices and direct debiting by franchisor
were anticipated and permitted by original fran-
chise contract, and thus assignment did not materi-
ally increase burdens or risks for franchisee with
respect to those issues, and did not violate District
of Columbia Retail Service Station Amendment
Act (RSSA), where that contract stated that prices
were "subject to change at any time and without
notice," method of payment could include automat-
ed direct debit "or any other method as desig-
nate[d] from time to time," franchisor could assign
any or all of its rights or interests, without restric-
tion, to any person or entity, and assignment by
franchisor could affect franchisee's rights and obli-

gations under agreement to extent that assignee
had policies or programs different from franchi-
sor's. Metroil, Inc. v. ExxonMobil Oil Corp.,
C A.D.C.2012, 672 F.3d 1108. Antitrust and Trade
Regulation <s=> 270(3)

Under District of Columbia law, alleged actions
by assignee of franchisor's gas station franchise
agreement, in raising the price charged for fuel,
demanding payment in advance instead of cash on
delivery, and withdrawing excessive funds from
franchisee's bank account, were permitted by the
franchise agreement and we're not invalid under
the Uniform Commercial Code (UCC). Metroil,
Inc. v. ExxonMobil Oil Corp., 2010, 724 F.Supp.2d
70, adhered to on reconsideration 2010 WL
7505713, affirmed 672 F.3d 1108. Contracts ®=
202(1)

Part 3. General Obligation and Construction of Contract

§ 28:2-313. Express warranties by affirmation, promise, description, sample.

Notes of Decisions

Summary judgment 6

6. Summary judgment

Genuine issue of material fact existed as to
whether valves used in heating, ventilation, and air
conditioning (HVAC) systems failed to conform to
manufacturer's alleged express warranties regard-

ing fitness for a particular purpose, precluding
summary judgment for manufacturer on express
warranty claims under District of Columbia's Uni-
form Commercial Code (UCC) brought by compa-
ny in the business of installing and repairing
HVAC units. Quality Air Services, LLC v. Mil-
waukee Valve Co, Inc., 2009, 671 F.Supp.2d 36.
Federal Civil Procedure <&» 2510

§ 28:2-314. Implied warranty: merchantability; usage of trade.

Notes of Decisions

1. In general

Under District of Columbia law, an action for
strict products liability and breach of the implied
warranties of merchantability is construed as a
single tort only when a third party is bringing the
action against a manufacturer of a product and
there is thus no privity of contract. Liberty Mut.
Ins. Co. v. Equipment Corp. of America, 2009, 646
F.Supp.2d 51. Action <s=> 38(4)

2. Choice of law

In action by property insurer, as subrogee for
insured buyer of drill rig, against, rig's manufactur-
er and seller seeking recovery for damage to rig
caused by fire which occurred in District of Colum-
bia, no conflict of laws existed with respect to
economic loss rule as would require District of
Columbia district court to apply District's choice of
law rules, where the District of Columbia and
Pennsylvania, where parties' relationship purport-
edly was centered, adopted the economic loss rule.
Liberty Mut. Ins. Co. v. Equipment Corp. of
America, 2009, 646 F.Supp.2d 51. Federal Courts
<£=> 1052.1

3. Reliance

Former cigarette smoker did not rely on manu-
facturers' alleged deliberate concealment of infor-
mation on addictive and harmful. qualities of smok-
ing in making decisions with respect to cigarette
smoking, and thus could not maintain action under
District of Columbia law for fraud, where she had
no contact with manufacturers apart from seeing
advertisements and she did not start to smoke, or
continue to smoke, because of advertisements.
Smith v. Brown & Williamson Tobacco Corp., 2000,
108 F.Supp.2d 12. Products Liability &=> 117;
Products Liability G=> 263

8. Damages

One engaged in the business of selling or other-
wise distributing products who sells or distributes
a defective product is subject to liability for harm
to persons or property caused by the defect.
Weakley v. Burnham Corp., 2005, 871 A.2d 1167.
Products Liability <S=> 111; Products Liability <£=»
164

9. Practice and procedure

In order to state a claim of breach of the implied
warranty of merchantability, the plaintiff must

249

§ 28:2-314
Note 9

demonstrate that the offensive object or substance
in the purchased food is not one that a consumer
would reasonably expect to find in the particular
type of dish or style of food served. Hoyte v.
Yum! Brands, Inc., 2007, 489 F.Supp.2d 24. Sales
<&> 284(1)

Plaintiff failed to allege injury from consuming
food containing trans fat purchased from national
restaurant chain, as required to state a claim for
breach of statutory and common law implied war-
ranty of merchantability, notwithstanding claim
that he was placed in a zone of "physical endanger-
ment" when sold food products containing trans
fats; plaintiff did not allege that the food he or-
dered was in any way unpalatable or that he
suffered any immediate ill effects after he ate his
order, he claimed no emotional harm, pain or
suffering, and he did not specify what "economic
injury" he allegedly suffered. Hoyte v. Yum!

COMMERCIAL INSTRUMENTS & TRANSACTIONS

Brands, Inc., 2007, 489 F.Supp.2d 24. Sales ®=»

284(1)

10. Review

Allegations that provider of components used in
electronic train control system provided such
equipment, software and support services to Wash-
ington Metropolitan Area Transit Authority
(WMATA) was sufficient to state that provider
dealt "in goods of the kind," and thus, was a
merchant, under District of Columbia's Uniform
Commercial Code (UCC), for purposes of breaches
of implied warranties of merchantability and fit-
ness for a particular purpose claims brought by
rail passengers and estates of deceased rail pas-
sengers arising from train collision. In re Fort
Totten Metrorail Cases Arising Out of the Events
of June 22, 2009, 2011, 793 F.Supp.2d 133. Sales
<S^434

§ 28:2-315. Implied warranty: fitness for particular purpose.

Notes of Decisions

1. In general

2. Implied warranty of quality, fitness, or con-

dition

Under District of Columbia's Uniform Commer-
cial Code (UCC), there was no implied warranty of
fitness for a particular purpose as to allegedly
defectively manufactured valves used in heating,
ventilation, and air conditioning (HVAC) units,
where company that had bought the valves and
installed them in multi-family housing buildings
bought the valves from a third party, manufacturer
of the valves had no knowledge of company's par-
ticular purpose, and company did not rely on man-
ufacturer's expertise when it bought the valves.
Quality Air Services, LLC v. Milwaukee Valve Co.,
Inc., 2009, 671 F.Supp.2d 36. Sales <3=* 273(3)

Under the law of the District of Columbia, a
breach of warranty claim is not actionable in coor-
dination with a products liability claim. Webster
v. Pacesetter, Inc., 2003, 259 F.Supp.2d 27. Sales
<S=>425

3. Products liability actions

Under the law of the District of Columbia, to
prevail on a claim for strict liability in tort, a
plaintiff must prove that: (1) the seller was en-

gaged in the business of selling the product that
caused the harm; (2) the product was sold in a
defective condition unreasonably dangerous to the
consumer or user; (3) the product was one which
the seller expected to and did reach the plaintiff
consumer or user without any substantial change
from the condition in which it was sold; and (4) the
defect was a direct and proximate cause of the
plaintiffs injuries. Webster v. Pacesetter, Inc.,
2003, 259 F.Supp.2d 27. Products Liability <$=> 113

Cardiac patient failed to establish that pacemak-
er's atrial lead had a design defect, as required to
support patient's products liability claim under the
law of the District of Columbia against pacemaker
manufacturer, which arose when pacemaker's atri-
al lead allegedly perforated patient's heart cham-
ber, causing cardiac tamponade; expert for patient
failed to identify the alleged design defect that
resulted in the injury, patient's claim as to danger
based on death rates from perforation and tampo-
nade was totally devoid of any factual foundation,
patient provided no evidence that there was a
safer, alternative design that could have been used,
and patient failed to prove that alleged defect was
a proximate cause of his injuries. Webster v.
Pacesetter, Inc., 2003, 259 F.Supp.2d 27. Evi-
dence ©^ 571(6); Products Liability <£=> 227; Prod-
ucts Liability <&* 387

Under District of Columbia law, to recover un-
der products liability theory, plaintiff must show,
inter alia, that product in question was defective,
and that defect caused the alleged harm. Dyson v.
Winfield, 2000, 113 F.Supp.2d 35, motion to amend
denied 129 F.Supp.2d 19, affirmed 21 Fed.Appx. 2,
2001 WL 1297493. Products Liability ©=> 119;
Products Liability <®=> 147

Breach of warranty claim is not actionable in
coordination with a products liability claim, as the
differences between strict liability in tort and im-
plied warranty, if any, are conceptual; thus, if
there are no issues unique to the warranty claim,
the warranty claim effectively merges with the

250

COMMERCIAL INSTRUMENTS & TRANSACTIONS § 28:2-607

Note 4

strict liability claim. Dyson v. Winfield, 2000, 113 a defective product is subject to liability for harm

F.Supp.2d 35, motion to amend denied 129 to persons or property caused by the defect.

F.Supp.2d 19, affirmed 21 Fed.Appx. 2, 2001 WL Weakley v.-Burnham Corp., 2005, 871 A.2d 1167.

1297493. Action ^ 27(1) Products Liability <&=> 111; Products Liability &=>

One engaged in the business of selling or other- \ g4
wise distributing products who sells or distributes

§ 28:2-316.01. Limitation of exclusion or modification of warranties consum-
ers.

Historical and Statutory Notes

Miscellaneous Notes trict of Columbia Official Code is redesignated as

Section 39(c) of D.C. Law 15-354 provides that § 28-316.01.
the section designation of § 28-2-316.1 of the Dis-

Part 5. Performance.

§ 28:2-508. Cure by seller of improper tender or delivery; replacement.

Notes of Decisions

2. Rescission or revocation of acceptance by denied 122 S.Ct. 2591, 536 U.S. 924, 153 L.Ed.2d

buyer 780. Election Of Remedies <®^ 3(3)

Purchasers of home could not seek rescission of Rescission is an equitable remedy, and a party

contract of sale as remedy for vendor's alleged see king rescission must restore the'other party to

breach of contract m failing to correct wet base- that party > s position at the time the contract was

merit problem before settlement even if vendor m&de> even when the party against whom rescis _

and real estate agents had fraudulently misrepre- sion ig ht has committed fraucL Dean v . Gar _

sented that the problem had been corrected, where land 20Q1 m A2d 9n certiorari denied 122

purchasers treated the property as their own and g ct 2m m v ^ m m L Ed M m Cancel _

affirmed the contract through continued perform- ^^ Qf Instruments ^ 23; Cancellation Of In-

ance; purchasers had been aware that at least , . ^^ oo

,, j -TjiT. wj struments <®=» 82
three agreed-upon repairs had not been completed

before settlement, but they nevertheless proceeded Inherent in the remedy of rescission is the re-

with settlement and accepted the property with turn of the parties to their pre-contract positions,

these problems, in exchange for payment from Dean v. Garland, 2001, 779 A.2d 911, certiorari

vendors and agents, and did not seek rescission for denied 122 S.Ct. 2591, 536 U.S. 924, 153 L.Ed.2d

a year and a half after they had moved in. Dean 780. Contracts &=> 265

v. Garland, 2001, 779 A.2d 911, certiorari denied if the defrauded party treats the property as his

122 S.Ct. 2591, 536 U.S. 924, 153 L.Ed.2d 780. own and affirms the contract through continued

Vendor And Purchaser <&=> 114 performance, that party is precluded from seeking

One cannot rescind for breach of contract and at rescission. Dean v. Garland, 2001, 779 A.2d 911,

the same time recover damages for the breach. certiorari denied 122 S.Ct. 2591, 536 U.S. 924, 153

Dean v. Garland, 2001, 779 A.2d 911, certiorari L.Ed.2d 780. Contracts &* 262

Part 6. Breach, Repudiation and Excuse.

§ 28:2-607. Effect of acceptance; notice of breach; burden of establishing
breach after acceptance; notice of claim or litigation to person
answerable over.

Notes of Decisions

Summary judgment 4 Milwaukee Valve Co., Inc., 2009, 671 F.Supp.2d 36.

2. Notice of breach

4. Summary judgment

Genuine issue of material fact existed as to

Constructive notice will satisfy the notice re- whether manufacturer of valves used in heating,

quirement under District of Columbia's Uniform ventilation, and air conditioning (HVAC) systems

Commercial Code (UCC) section governing breach had constructive notice in a timely manner of its

of warranty claims. Quality Air Services, LLC v. alleged breach of warranties, precluding summary

251

§ 28:2-607 commercial instruments & transactions

Note 4

judgment for manufacturer on breach of warranty Quality Air Sendees, LLC v. Milwaukee Valve Co.,
claims under District of Columbia's Uniform Com- Inc., 2009, 671 F.Supp.2d 36. Federal Civil Proce-
mercial Code (UCC) brought by company in the d ure ©=> 2510
business of . installing and repairing HVAC units.

§ 28:2-608. Revocation of acceptance in whole or in part.

Notes of Decisions

1. Waiver of right to rescind these problems, in exchange for payment from
Purchasers of home could not seek rescission of vendors and agents, and did not seek rescission for

contract of sale as remedy for vendor's alleged a year and a half after they had moved in. Dean

breach of contract in failing to correct wet base- v. Garland, 2001, 779 A.2d 911, certiorari denied

ment problem before settlement, even if vendor 122 S.Ct. 2591, 536 U.S. 924, 153 L.Ed.2d 780.

and real estate agents had fraudulently misrepre- Vendor And Purchaser <3=> 114
sented that the problem had been corrected, where defrauded party treats the property as his

purchasers treated the property as their own and -, «- A , + +u u +• „ , rt/ j

affirmed the contract through continued perform- own and affirms the contract through continued

ance; purchasers had been aware that at least performance, that party is precluded from seeking

three agreed-upon repairs had not been completed rescission. Dean v. Garland, 2001, 779 A.Zd Jll,

before settlement, but they nevertheless proceeded certiorari denied 122 S.Ct. 2591, 536 U.S. 924, 153

with settlement and accepted the property with L.Ed.2d 780. Contracts <3=> 262

Part 7. Remedies.
§ 28:2-706. Seller's resale including contract for resale.

Notes of Decisions

Resale profit 2 the profit a seller realizes on a resale. In re
Cooper, 2002, 273 B.R. 297. Sales <3=> 336

2. Resale profit

Under District of Columbia law, the general rule
is that a defaulting buyer is not entitled to recover

§ 28:2-712. "Cover"; buyer's procurement of substitute goods.

Notes of Decisions

1. Cover enter cover contract inadequately explained effect
A party concerned about an apparent unwilling- of different labor costs between cover contract

ness or inability of another party to proceed with a requiring drill and tap method to join carbon steel

contract should be able, even prior to a breach, to grates and original contract requiring a less expen-

arrange for appropriate cover; thus, although the sive welding method to join stainless steel; the

covering party, if it imprudently enters into a firm court adjusted the cover contract price to account

replacement contract, may end up being liable on for the fact that the original contract called for the

both contracts if the original contract is not in fact fabrication of thirty-eight grates and the cover

breached, the cover contract is not itself a breach contract called for the fabrication of fifty grates,

of the original contract. Mashack v. Superior awarded the difference between the adjusted cover

Management Services, Inc., 2002, 806 A.2d 1239. contract price and the original contract price, but

Contracts @=* 321(3) never quantified the added costs of drill and tap

and never articulated a view regarding an offset

2. Measure of damages based on the adjustment. Mashack v. Superior
Court awarding damages for subcontractors Management Services, Inc., 2002, 806 A.2d 1239.

breach that required government contractor to Damages ®= 120(3)

§ 28:2-714. Buyer's damages for breach in regard to accepted goods.

Notes of Decisions

1. Election to rescind tion of the contract, that party may elect one of

Where a party to an executed contract discovers two mutually exclusive remedies; he may either

a material misrepresentation made in the execu- affirm the contract and sue for damages, or repu-

252

COMMERCIAL INSTRUMENTS & TRANSACTIONS

diate the contract and recover that with which he
has parted. Dean v. Garland, 2001, 779 A.2d 911,

§ 28:2-725

Note 3

certiorari denied 122 S.Ct. 2591, 536 U.S. 924, 153
L.Ed.2d 780. Fraud <&=> 32

§ 28:2-722. Who can sue third parties for injury to goods.

Notes of Decisions

1. Joint tortfeasors

There is a right of equal contribution among
joint tortfeasors. M. Pierre Equipment Co., Inc.
v. Griffith Consumers Co., 2003, 831 A.2d 1036.
Contribution <§=> 5(1)

A settling tortfeasor who brings a contribution
action against a non-settling tortfeasor has the
burden of establishing the liability of the non-
settling tortfeasor and the reasonableness of set-
tlement with injured persons. M. Pierre Equip-
ment Co., Inc. v. Griffith Consumers Co, 2003, 831
A.2d 1036. Contribution <S=> 9(6)

Whether nonsettling contractor w T as negligent in
process of converting home heating system from

oil to natural gas, and whether any such negligence
proximately caused basement oil spill that oc-
curred when settling tortfeasor mistakenly deliv-
ered oil to that home, were jury questions in
settling tortfeasor's contribution action in view of
evidence that contractor did not obtain required
regulatory licenses, permits, and inspections, that
it failed to cap, disable, or remove pipes through
which oil had been pumped into home, and that
homeowners were not contributorily negligent. M.
Pierre Equipment Co., Inc. v. Griffith Consumers
Co., 2003, 831 A.2d 1036. Contribution &=> 9(7)

§ 28:2-725. Statute of limitations in contracts for sale.

Notes of Decisions

1. In general

Manufacturer of a motor coach engine did not
waive a limitations defense to a claim that it
breached an implied warranty, even though the
manufacturer withdrew the defense in an interrog-
atory response; the withdrawal was submitted in
error, the manufacturer filed an amended response
once it recognized the error, and the plaintiff was
not prejudiced by the erroneous response, which
was submitted only four days before the close of
discovery. Capital Motor Lines v. Detroit Diesel
Corp., 2011, 799 F.Supp.2d 11. Federal Civil Pro-
cedure <$=> 1491; Federal Civil Procedure <£=> 1531

Under District of Columbia law, contract be-
tween provider of components used in electronic
train control system and Washington Metropolitan
Area Transit Authority (WMATA) did not include
express warranty of future performance under
Uniform Commercial Code (UCC); none of rele-
vant statements in agreement qualified as anything
more than description of product's condition at
time of delivery, and none of statements designat-
ed defined future period of time during which
alleged warranty would apply. In re Fort Totten
Metrorail Cases Arising Out of the Events of June
22, 2009, 2011, 793 F.Supp.2d 133. Sales <$=> 279

Residual three-year statutory limitations period,
for claims not otherwise specifically prescribed,

rather than four-year limitations provision for
breach of a sales contract under Uniform Commer-
cial Code (UCC), applied to consumer's class action
against cable company for unreasonably high late
penalties, brought pursuant to Consumer Protec-
tion Procedures Act (CPPA). District Cablevision
Ltd. Partnership v. Bassin, 2003, 828 A.2d 714.
Antitrust And Trade Regulation <£=> 353

3. Commencement of limitations period, gen-
erally

Cause of action for patient's implied warranty
claims against manufacturer of prosthetic hip ac-
crued, and statute of limitations began to run
under District of Columbia law, when patient un-
derwent hip surgery, rather than when patient
learned of defect in prosthetic hip. Hunt v. DePuy
Orthopaedics, Inc., 2009, 636 F.Supp.2d 23. Limi-
tation Of Actions <s=>'49(7); Limitation Of Actions
<S=>95(9)

Parking garage patron's claims alleging manu-
facturer of vehicle that rolled down parking ramp
breached express and implied warranties accrued,
for purposes of four-year statute of limitations,
when vehicle was purchased. Lee v. Wolfson,
2003, 265 F.Supp.2d 14. Limitation Of Actions ©=>
47(1); Limitation Of Actions <&* 49(7)

Article 2A
Leases.

Part 2.

Formation and Construction
of Lease Contract.

Section

28:2A-204. Formation in general.

253

Part 5. Default.
B. Default By Lessor.

§ 28:2-725

COMMERCIAL INSTRUMENTS & TRANSACTIONS

Note 3

Section

28:2A-521.

Lessee's right to specific performance
or replevin.

C. Default By Lessee.

Section

28:2A-528.

Lessor's damages for nonacceptance,
failure to pay, repudiation, or other
default.

Part 2. Formation and Construction of Lease Contract

§ 28:2A-204. Formation in general.

Notes of Decisions

In general 1

1. In general

Ambiguity regarding which travel agency had
signed, as lessee, the lease of an automated com-
puter airline reservation and ticketing system in-
volved the identity of one of the parties to the
lease rather than the "material terms" of the lease,
and thus, the presumption that an ambiguity
should be construed against the drafter was inap-
plicable. Affordable Elegance Travel, Inc. v.
Worldspan, L.P., 2001, 774 A2d 320. Bailment <S>
1

Part 5. Default

B. Default By Lessor.
§ 28:2A-521. Lessee's right to specific performance or replevin.

Notes of Decisions

In general 1

1. In general

Under District of Columbia law, participant in
airline's frequent flyer program had no right of

detinue with respect to his frequent flyer miles,
where he did not obtain miles through sale of
goods. Ficken v. AMR Corp., 2008, 578 F.Supp.2d
134. Detinue <e> 1

C. Default By Lessee.

§ 28:2A-528. Lessor's damages for nonacceptance, failure to pay, repudiation,
or other default.

In general 1

Notes of Decisions

1. In general

Evidence that rental cost of the equipment
through term of lease was $15,889.81 and that
equipment retained by lessee was worth $11,146,

and customer statement that lessor sent to lessee,
stating that lessee owed lessor $37,823.54, sup-
ported award of $27,559.73 to lessor, for lessee's
breach of lease of automated computer airline res-
ervation and ticketing system. Affordable Ele-
gance Travel, Inc. v. Worldspan, L. P., 2001, 774
A.2d320. Damages^ 140

254

COMMERCIAL INSTRUMENTS & TRANSACTIONS

Article 3
Negotiable Instruments.

§ 28:3-302

Note 3

Part 1. General Provisions and Definitions.

Section

28:3-110. Identification of person to whom instru-
ment is payable.

Part 2. Negotiation, Transfer,
and Indorsement.

28:3-203. Transfer of instrument; rights ac-
quired by transfer.

Part 3. Enforcement of Instruments.

Section

28:3-302. Holder in due course.
28:3-305. Defenses and claims in recoupment.
28:3-311. Accord and satisfaction by use of in-
strument.

Part 4. Liability of Parties.

28:3-401.
28:3-405,

Signature.

Employer's responsibility for fraudu-
lent indorsement by employee.
28:3^16. Transfer warranties.

Part 1. General Provisions and Definitions.
§ 28:3-110. Identification of person to whom instrument is payable.

Notes of Decisions

Summary judgment 2

2. Summary judgment

Material issues of fact existed as to whether
creditor benefited from two payments made by

Chapter 7 debtor during 90-day preference period,
precluding summary judgment for either trustee
or creditor on issue of whether payments were
made to or for creditor's benefit and thus subject
to avoidance as preferential transfers. In re NET-
tel Corp., Inc., 2006, 364 B.R. 433. Bankruptcy ©=>
2164.1

Part 2. Negotiation, Transfer, and Indorsement
§ 28:3-203. Transfer of instrument; rights acquired by transfer.

1. Nonnegotiable instruments

Bank that purchased assignee of note secured by
deed of trust was rightful note holder, and thus
could properly commence non-judicial foreclosure
proceedings after borrower defaulted, even though
bank did not properly record assignment of note,

Notes of Decisions

where note was endorsed in blank and transferred
to bank, and bank provided written notice and in
all other ways complied with requirements for
foreclosure proceedings. Leake v. Prensky, 2011,
798 F.Supp.2d 254. Mortgages ©=> 341

Part 3. Enforcement of Instruments.

§ 28:3-302. Holder in due course.

Notes of Decisions

3. Knowledge or notice of claim or defect

Mortgagors sufficiently alleged that mortgagee's
assignee was a holder in due course, as required
under District of Columbia law for mortgagors to
assert claims against assignee in connection with
their refinance loan, where they alleged that as-
signee knew or should have known that they could
not afford the loan and that there was no reason-
able probability that they could pay it. Carroll v.
Fremont Inv. & Loan, 2009, 636 F.Supp.2d 41.
Mortgages <3=> 216

An order expunging a lis pendens meets the
three criteria of the collateral order doctrine for
appealability of interlocutory orders; the order
conclusively resolves whether the lis pendens
should or should not be cancelled because nothing
further in the suit can affect the validity of the
notice, the order canceling the lis pendens does not
address the merits of the underlying claim, and if
the movant had to wait until final judgment on the
underlying claim, the realty could be sold before
the issue was resolved, thereby rendering the or-

255

§ 28:3-302 commercial instruments & transactions

Note 3

der unreviewable. McAteer v. Lauterbach, 2006,
908 A.2d 1168. Federal Courts <^> 1062

§ 28:3-305. Defenses and claims in recoupment.

United States Supreme Court

Bankruptcy, claim against debtors for fraud in sale of

Bankruptcy, fraud discharge exception, debt business, see Archer v. Warner, 2003, 123

for money promised in settlement agree- S.Ct. 1462, 538 U.S. 314, 155 L.Ed.2d 454.
ment releasing creditors' prior state law

§ 28:3-311. Accord and satisfaction by use of instrument.

Notes of Decisions

In general 1

1. In general

Common law elements of accord and satisfaction,
w T hich have been codified in the Uniform Commer-
cial Code (UCC), are (1) honest dispute over unliq-
uidated claim, (2) tender of payment with the
explicit understanding of both parties that it is in
full payment, and (3) acceptance by creditor with
understanding that the tender is accepted as full
payment. Curtin v. United Airlines, Inc., 2000,
120 F.Supp.2d 73, affirmed 275 F.3d 88, 348
U.S.App.D.C. 309. Accord And Satisfaction ©=» 1

Fact that airline offered to pay less money for
lost luggage than passengers thought they were
due did not mean that airline's payments to pas-
sengers were partial payments on amounts owed
or that the accord and satisfaction element of an
honest dispute over an unliquidated claim was not
met, where passengers' claims were disputed in
that passengers claimed to be owed one amount
and airline offered to pay a lower amount. Curtin
v. United Airlines, Inc., 2000, 120 F.Supp.2d 73,
affirmed 275 F.3d 88, 348 U.S.App.D.C. 309. Ac-
cord And Satisfaction ©=» 10(1)

Accord and satisfaction elements that require
tender of payment with explicit understanding of
both parties that it was in full payment and accep-
tance by creditor with understanding that tender is
accepted as full payment were met when airline
indicated its intention that check for lost luggage
would constitute full payment of passenger's claims
both by sending letter to passenger telling him
that and by clearly indicating that fact on back of
check in space where passenger endorsed check,
and passenger accepted airline's offer by cashing
the check. Curtin v. United Airlines, Inc., 2000,
120 F.Supp.2d 73, affirmed 275 F.3d 88, 348
U.S.App.D.C. 309. Accord And Satisfaction <^>
11(2)

Fact that passenger, who had received check
from airline for her lost luggage, indicated on
check before cashing it that she did not agree that
the check constituted payment in full on her claims
did not mean that accord and satisfaction element
that requires acceptance by creditor with under-
standing that the tender is accepted as full pay-

ment was not met; passenger could not avoid the
consequences of accepting the accord, i.e., cashing
the check, by declaring that she did not assent to
the condition attached by airline. Curtin v. United
Airlines, Inc., 2000, 120 F.Supp.2d 73, affirmed 275
F.3d 88, 348 U.S.App.D.C. 309. Accord And Satis-
faction ©^ 11(3)

Statement by airline that its liability for lost
luggage was limited under the Warsaw Conven-
tion, and airline's failure to disclose legal disputes
over whether the Warsaw Convention's limitation
of liability for lost luggage applied when airline
failed to mark weight of baggage on baggage
check, was neither a mistake nor a misrepresenta-
tion of a material fact that would preclude a meet-
ing of the minds necessary to form binding offer
by airline to settle passengers' claims for lost
luggage, and thus, airline's failure to disclose exis-
tence of the issue did not preclude a valid accord
and satisfaction defense to passengers' lost lug-
gage claims, where airline merely stated its legal
opinion as to the extent of its liability, and its
position was supported by several court rulings,
and passengers were free to investigate and to
refuse to accept airline's settlement check if they
did not agree. Curtin v. United Airlines, Inc.,
2000, 120 F.Supp.2d 73, affirmed 275 F.3d 88, 348
U.S.App.D.C. 309. Accord And Satisfaction <&» 20

Accord and satisfaction is an affirmative defense,
with the burden of proof on the proponent. So v.
514 10th Street Associates, L.P, 2003, 834 A.2d
910. Accord And Satisfaction <3=* 1; Accord And
Satisfaction ®=» 26(1)

When a debtor tenders a check to the creditor
that contains the phrase "payment in full" or other
words to that effect, the creditor's act of cashing
the check constitutes both the acceptance of the
accord and its satisfaction. So v. 514 10th Street
Associates, L.P., 2003, 834 A2d 910. Accord And
Satisfaction @=> 11(2)

Accord and satisfaction requires both a contract,
known as accord, and a performance of that con-
tract, known as the satisfaction. So v. 514 10th
Street Associates, L.P., 2003, 834 A.2d 910. Ac-
cord And Satisfaction <s=* 1

Accord and satisfaction is a method of discharg-
ing and terminating an existing right, and consti-
tutes a perfect defense in an action for enforce-

256

COMMERCIAL INSTRUMENTS & TRANSACTIONS

ment of the previous claim. So v. 514 10th Street
Associates, L.P., 2003, 834 A.2d 910. Accord And
Satisfaction <^ 1

§ 28:3-416

Note 2

§ 28:3-401. Signature.

Limitation of actions 3

Part 4. Liability of Parties.

Notes of Decisions

3. Limitation of actions

Bank could shorten the one-year Uniform Com-
mercial Code (U.C.C.) statute of repose period for

reporting unauthorized checks or withdrawals to
60-days through contract with bank customer. Pe-
ters v. Riggs Nat. Bank, N.A., 2008, 942 A.2d 1163.
Banks And Banking <^ 148(4)

§ 28:3-405. Employer's responsibility for fraudulent indorsement by employee.

Notes of Decisions

Summary judgment 1

1. Summary judgment

Fact issue existed as to whether bank where
union local maintained checking account had exer-
cised ordinary care with respect to that account,
precluding summary judgment for bank, on con-

action arising from scheme by former employees of
local to embezzle union funds using account; union
proffered expert testimony that bank had failed to
exercise ordinary care regarding honoring of
checks written on account. American Federation
of Teachers, AFL-C10 v. Bullock, 2008, 539
F.Supp.2d 161, reconsideration granted, vacated
605 F.Supp.2d 251, appeal dismissed 2009 WL

tributary negligence grounds, in union's negligence 5125394. Federal Civil Procedure <^ 2487

§ 28:3-416. Transfer warranties.

Notes of Decisions

2. Guaranty

If consideration for settlement of promissory
note holder's suit against maker and others was in
reality paid on maker's behalf, then it was partial
performance by the principal obligor and dis-
charged the guarantor's secondary obligation to
that extent. Allen v. Yates, 2005, 870 A.2d 39.
Guaranty <&=> 59

Any part of consideration which did not come
from promissory note maker or persons in privity
with it when maker and others settled holder's suit
did not reduce guarantor's liability as secondary
obligor. Allen v. Yates, 2005, 870 A.2d 39. Guar-
anty c^ 59

Any consideration, whether monetary or other-
wise, received by the obligee from the principal
obligor in payment of the obligation reduces the
creditor's entitlement against the secondary obli-
gor. Allen v. Yates, 2005, 870 A.2d 39. Guaranty
e^ 59; Principal And Surety <3^ 112

Guarantor's liability on promissory notes was
limited to amounts not paid by or on behalf of the
maker, defaulting obligor; the guarantor guaran-
tied payment of the total indebtedness evidenced
by the notes remaining unpaid following maker's
default. Allen v. Yates, 2005, 870 A.2d 39. Guar-
anty &=> 36(3); Guaranty <£=> 59

Guarantor was liable only to the extent that
holder had not recovered on the promissory notes.
Allen v. Yates, 2005, 870 A.2d 39. Guaranty <^
36(3)

Release of promissory note maker and prejudi-
cial dismissal of claims after settlement with holder
did not extinguish holder's rights against guaran-
tor; the dismissal of the maker, the principal obli-
gor, was not unconditional, but the holder express-
ly preserved his right to maintain his action
against the guarantor. Allen v. Yates, 2005, 870
A.2d 39. Guaranty <s=> 64

As a general rule, an obligee's release of the
principal obligor discharges the principal's debt
and thereby relieves the secondary obligor of lia-
bility; however, this rule has no application where
obligee has preserved his rights against the sec-
ondary obligor. Allen v. Yates, 2005, 870 A.2d 39.
Guaranty <£=> 64; Principal And Surety <£=> 118

Settlement of claims against maker of promisso-
ry notes did not discharge guarantor; the notes
expressly authorized holder to release any party
from liability from the indebtedness reflected in
the notes without affecting his rights against other
obligors, and the settlement agreement stated that
guarantor was not released to the extent he was
liable to any parties to the agreement. Allen v.
Yates, 2005, 870 A.2d 39. Guaranty <^ 64; Guar-
anty <&=> 72

257

§ 28:3-416 commercial instruments & transactions

Note 2

INDEX

Consult General Index

258

Internet Archive Audio

Featured

Top

Images

Featured

Top

Software

Featured

Top

Books

Featured

Top

Video

Featured

Top

Mobile Apps

Browser Extensions

Archive-It Subscription

Save Page Now

Full text of "2001 DC Code, Volume 13, 2012 Supplementary Pamphlet, 2001 Edition"

See other formats